*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

EO12866_NSPSResidentialWoodHeaters_2060-AP93_NPRM_RIA_20130613.docx

Regulatory Impact Analysis (RIA) for Proposed 

Residential Wood Heaters NSPS Revision

 

Draft Report to OMB
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

_________________________________

RTI International is a trade name of Research Triangle Institute.

November 2013

Regulatory Impact Analysis (RIA) 

for Proposed Residential Wood 

Heaters NSPS Revision

Draft Report for OMB

Prepared for

Larry Sorrels

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards (OAQPS)

Air Economics Group (AEG)

(MD-C439-02)

Research Triangle Park, NC 27711

Prepared by

Jeffrey Petrusa

Stephanie Norris

Brooks Depro

RTI International

3040 Cornwallis Road

Research Triangle Park, NC 27709

Contract No. EP-D-06-003

Work Assignment No. 4-84

RTI Project Number 0212979.001.002
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

_________________________________

RTI International is a trade name of Research Triangle Institute.

Contract No. EP-D-06-003

Work Assignment No. 4-84

RTI Project Number

0212979.001.002

Regulatory Impact Analysis (RIA) 

for Proposed Residential Wood 

Heaters NSPS Revision

Draft Report for OMB

 November 2013

Prepared for

Larry Sorrels

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards (OAQPS)

Air Economics Group (AEG)

(MD-C439-02)

Research Triangle Park, NC 27711

Prepared by

Jeffrey Petrusa

Stephanie Norris

Brooks Depro

RTI International

3040 Cornwallis Road

Research Triangle Park, NC 27709
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

iii

CONTENTS

Section Page

Section 1 Executive Summary............................................................................................... 1-1

1.1 Analysis Summary............................................................................................... 1-3

1.2 Organization of this Report.................................................................................. 1-5

Section 2 Introduction............................................................................................................ 2-1

2.1 Background for Proposed Rule............................................................................ 2-1

2.2 Room Heaters....................................................................................................... 2-1

2.3 Central Heaters: Hydronic Heaters and Forced-Air Furnaces........................... 2-10

2.4 New Residential Masonry Heaters..................................................................... 2-16

Section 3 Industry Profile ...................................................................................................... 3-1

3.1 Supply Side .......................................................................................................... 3-1

3.1.1 Production Process................................................................................... 3-2

3.1.2 Product Types .......................................................................................... 3-2

3.1.3 Costs of Production.................................................................................. 3-5

3.2 Demand Side........................................................................................................ 3-8

3.2.1 End-Use Consumer Segments................................................................ 3-10

3.2.2 Regional Variation in Residential Demand ........................................... 3-10

3.2.3 National Home Heating Trends............................................................. 3-13

3.2.4 Substitution Possibilities........................................................................ 3-15

3.2.5 Price Elasticity of Demand .................................................................... 3-15

3.3 Industry Organization ........................................................................................ 3-16

3.3.1 Market Structure .................................................................................... 3-17

3.3.2 Manufacturing Plants............................................................................. 3-18

3.3.3 Location ................................................................................................. 3-20

3.3.4 Company Sales and Employment .......................................................... 3-21
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

iv

3.4 Residential Wood Heater Market....................................................................... 3-23

3.4.1 Market Prices......................................................................................... 3-24

3.4.2 International Competition ...................................................................... 3-25

3.4.3 Future Market Trends ............................................................................ 3-26

Section 4 Baseline Emissions and Emission Reductions....................................................... 4-1

4.1 Introduction.......................................................................................................... 4-1

4.2 Background to Emissions Estimates.................................................................... 4-1

4.2.1 Emissions Factors .................................................................................... 4-3

4.2.2 Voluntary Programs............................................................................... 4-10

4.2.3 Shipment Data Used to Estimate Baseline Emissions........................... 4-11

4.3 Estimated PM2.5 Emissions from Shipments of New Appliances ..................... 4-12

4.4 Methodology for Estimating VOC Emissions from New Units........................ 4-16

4.5 Methodology for Estimating CO Emissions from New Units........................... 4-21

Section 5 Cost Analysis, Energy Impacts, and Executive Order Analyses........................... 5-1

5.1 Background for Compliance Costs...................................................................... 5-1

5.1.1 Estimated Research and Development (R&D) Costs.............................. 5-1

5.1.2 Masonry Heaters...................................................................................... 5-4

5.1.3 General Approach and Assumptions for Costs to Manufacturers ........... 5-5

5.1.4 General Approach and Assumptions for Costs to Masonry Heater

Manufacturers.......................................................................................... 5-8

5.1.5 General Approach and Assumptions for All Appliances......................... 5-9

5.2 Compliance Costs of the Proposed Rule............................................................ 5-14

5.3 How Might People and Firms Respond? A Qualitative Partial Equilibrium 

Analysis.............................................................................................................. 5-17

5.3.1 Changes in Market Prices and Quantities.............................................. 5-17

5.3.2 Partial Equilibrium Measures of Social Cost: Changes in 

Consumer and Producer Surplus............................................................ 5-20

5.4 Social Cost Estimate .......................................................................................... 5-21

5.5 Energy Impacts .................................................................................................. 5-21

5.6 Unfunded Mandates Reform Act (UMRA) ....................................................... 5-22
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

v

5.6.1 Future and Disproportionate Costs........................................................ 5-22

5.6.2 Effects on the National Economy .......................................................... 5-22

5.6.3 Executive Order 13045: Protection of Children from 

Environmental Health Risks and Safety Risks ...................................... 5-23

5.6.4 Executive Order 12898: Federal Actions to Address Environmental 

Justice in Minority Populations and Low-Income Populations............. 5-24

5.7 Employment Impacts......................................................................................... 5-24

5.7.1 Employment Impacts within the Regulated Industry............................. 5-26

Section 6 Small Entity Screening Analysis ........................................................................... 6-1

6.1 Small Entity Data Set........................................................................................... 6-1

6.2 Small Entity Economic Impact Measures............................................................ 6-2

6.2.1 Establishment Employment and Receipts................................................ 6-2

6.2.2 Establishment Compliance Cost .............................................................. 6-3

6.3 Initial Regulatory Flexibility Analysis............................................................... 6-14

6.3.1 Reasons Why Action Is Being Considered............................................ 6-14

6.3.2 Statement of Objectives and Legal Basis of Proposed Rule.................. 6-14

6.3.3 Description and Estimate of the Number of Small Entities................... 6-15

6.3.4 Description and Compliance Costs........................................................ 6-15

6.3.5 Panel Recommendations for Small Business Flexibilities..................... 6-17

Section 7 Human Health Benefits of Emissions Reductions................................................. 7-1

7.1 Synopsis............................................................................................................... 7-1

7.2 PM2.5-Related Human Health Benefits................................................................ 7-1

7.2.1 Health Impact Assessment....................................................................... 7-2

7.2.2 Economic Valuation................................................................................. 7-5

7.2.3 Benefit-per-ton Estimates ........................................................................ 7-7

7.2.4 PM2.5 Benefits Results.............................................................................. 7-8

7.2.5 Characterization of Uncertainty in the Monetized PM2.5 Benefits......... 7-10

7.3 Unquantified Benefits........................................................................................ 7-15

7.3.1 HAP Benefits......................................................................................... 7-16

7.3.2 Carbon Monoxide Co-Benefits.............................................................. 7-26

7.3.3 Black Carbon (BC) Benefits.................................................................. 7-27
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

vi

7.3.4 VOCs as a PM2.5 Precursor.................................................................... 7-29

7.3.5 VOCs as an Ozone Precursor................................................................. 7-29

7.3.6 Visibility Impairment Co-Benefits ........................................................ 7-30

7.4 References.......................................................................................................... 7-30

Section 8 Comparison of Monetized Benefits and Costs....................................................... 8-1

8.1 Summary.............................................................................................................. 8-1

Total Annualized Costs ($ millions)a..................................................................................... 8-7

Monetized Net Benefits ($millions)a..................................................................................... 8-7

Section 9 References And Cost APPENDIX......................................................................... 9-1
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

vii

LIST OF FIGURES

Number Page

3-1. Census Regions and Divisions of the United States................................................... 3-13

3-2. Declining Trend in U.S. Housing Units Using Wood Fuel: 1989–2005 .................... 3-14

3-3. Annual Plant Capacity Utilization for Heating Equipment Manufacturers 

(NAICS 333414): 2002–2006..................................................................................... 3-18

5-1. Market Demand and Supply Model: With and Without Regulation .......................... 5-19

6-1. Population of Firebox Models and Average Models per Establishment by

Product Type................................................................................................................. 6-8

6-2. Distribution of National Compliance Costs by Product Type in 2014 to 2022............ 6-9

7-1. Total Monetized PM2.5 Benefits of the Proposed Residential Wood Heaters 

NSPS in the 2014–2022 Time Frame ......................................................................... 7-11

7-2. Breakdown of Total Monetized PM2.5 Benefits of Proposed Residential Wood 

Heaters NSPS by Category ......................................................................................... 7-11

7-3. Percentage of Adult Population by Annual Mean PM2.5 Exposure in the 

Baseline....................................................................................................................... 7-16

7-4. Cumulative Distribution of Adult Population by Annual Mean PM2.5 Exposure 

in the Baseline............................................................................................................. 7-17

7-5. Estimated Census Tract Carcinogenic Risk from HAP Exposure from Outdoor 

Sources (2005 NATA)................................................................................................ 7-19

7-6. Estimated Chronic Census Tract Noncancer (Respiratory) Risk from HAP 

Exposure from Outdoor Sources (2005 NATA)......................................................... 7-20

8-1. Net Annual Benefits Range in 2014–2022 Time Frame for PM2.5 Reductions for 

the Proposed Option...................................................................................................... 8-4

8-2. Net Annual Benefits Range in 2014–2022 Time Frame for PM2.5 Reductions for 

the Alternative Option................................................................................................... 8-5
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

viii

LIST OF TABLES

Number Page

1-1. Summary of the Monetized Benefits, Social Costs, and Net Benefits for the 

Proposed Residential Wood Heaters NSPS in the 2014–2022 Time Frame 

($2010 millions)............................................................................................................ 1-6

2-1. Proposed Approach Subpart AAA Compliance Deadlines and PM Emissions 

Limits............................................................................................................................ 2-4

2-2. Alternative Approach Subpart AAA Compliance Deadlines and PM Emissions 

Limits............................................................................................................................ 2-4

2-3. Proposed Approach Subpart QQQQ Compliance Dates and PM Emissions 

Standards..................................................................................................................... 2-11

2-4. Alternative Approach Subpart QQQQ Compliance Dates and PM Emissions 

Standards..................................................................................................................... 2-11

3-1. Costs for Labor and Materials for U.S. Heating Equipment and Hardware 

Manufacturing: 2011..................................................................................................... 3-7

3-2. Costs for U.S. Masonry Contractors and Single-Family Home Contractors: 2007...... 3-9

3-3. Costs for U.S. Plumbing and Heating Equipment Supplies Wholesalers: 2007........... 3-9

3-4. Costs for U.S. Specialized Home Furnishing Stores: 2007 .......................................... 3-9

3-5. Wood as Primary Fuel Source for Home Heating in the United States: 2006–

2008............................................................................................................................. 3-11

3-6. Wood as Secondary Heat Source by Census Division, 2009 (millions of 

households) ................................................................................................................. 3-12

3-7. Number of U.S. Companies by Business Type........................................................... 3-19

3-8. U.S. Wood Heat Equipment Industry by Geographic Location ................................. 3-21

3-9. U.S. Sales and Employment Statistics by Business Type........................................... 3-22

3-10. Profit Margins for NAICS 333414, 238140, and 423720: 2008................................. 3-23

3-11. Unit Shipments and Percentage of Total Units by Product Type: 2008..................... 3-24

3-12. Installation Costs for Average System by Product Type (North America): 2008 ...... 3-24

3-13. Manufacturers’ Price by Product Type (North America): 2008 ................................. 3-25

4-1. RWC Emission Inventory Categories Used.................................................................. 4-1

4-2. PM2.5 Tons per Appliance Estimate (Baseline) ............................................................ 4-3

4-3. NSPS Adjusted Factors for PM2.5 ................................................................................. 4-9

 4-3. Estimated Annual Shipped Units............................................................. 4-9

4-5. Estimated PM2.5 Emissions (Tons): Baseline ............................................................. 4-14

4-6. Estimated PM2.5 Emissions (Tons): Proposed Option ................................................ 4-14
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

ix

4-7. Estimated PM2.5 Emissions (Tons): Alternative Option ............................................. 4-15

4-8. NSPS VOC Emission Factors..................................................................................... 4-17

4-9. Estimated VOC Emissions (Tons): Baseline .............................................................. 4-19

4-10.Estimated VOC Emissions (Tons): Proposed Option.................................................. 4-19

4-11. Estimated VOC Emissions (Tons): Alternative Option.............................................. 4-20

4-12. NSPS CO Emission Factors........................................................................................ 4-22

4-13. Estimated CO Emissions (Tons): Baseline ................................................................. 4-24

4-14. Estimated CO Emissions (Tons): Proposed Option.................................................... 4-24

4-15. Estimated CO Emissions (Tons): Alternative Option................................................. 4-25

5-1. Example of Manufacturers’ Estimates of Costs to Develop Model Line (4 

Fireboxes) ..................................................................................................................... 5-2

5-2. Annual Cost Summary: Development of 4 Model Fireboxes....................................... 5-3

 5-3. Labor-based Employment Estimates for Certification, Quality Assurance, Reporting, 

 Recordkeeping, and Accreditation Requirements for the Proposed NSPS Option. 5-10

5-4. Summary of Average Annualized Nationwide Costs for 2014–2022 Time Frame 

Under the Proposal and Alternative Options.............................................................. 5-15

5-5a.Industry Level-Annualized Compliance Costs (2010 dollars) as a Fraction of 

Total Industry Revenue by Product Type in the 2014–2022 Time Frame—

Proposal Option .......................................................................................................... 5-16

5-5b. Industry Level-Annualized Compliance Costs (2010 dollars) as a Fraction of 

Total Industry Revenue by Product Type in 2014–2022 Time Frame—

Alternative Option ...................................................................................................... 5-17

5-6. Hypothetical Price Increases for a 1% Increase in Unit Costs.................................... 5-20

5-7. Hypothetical Consumption Decreases for a 1% Increase in Unit Costs..................... 5-20

5-8. Percent of Abatement Expenditures on Changes in Production Processes................. 5-28

6-1. Revised NSPS Proposal for Residential Wood Heating Devices: Affected 

Sectors and SBA Small Business Size Standards......................................................... 6-3

6-2. Average Receipts for Affected Industry by Enterprise Employment Size: 2007 

($2010 million/establishment)...................................................................................... 6-5

6-3. Average Receipts for Affected Industry by Enterprise Receipt Range: 2007 

($2010 million/establishment)...................................................................................... 6-5

6-4. Per-Entity Annualized Compliance Costs by Product Type—Proposed Option 

($2010 millions)............................................................................................................ 6-6

6-5. Per-Entity Annualized Compliance Costs by Product Type—Alternative Option 

($2010 millions)............................................................................................................ 6-7

6-6. Representative Establishment Costs Used for Small Entity Analysis ($2010)............. 6-7

6-7. Cost-to-Receipt Ratio Results for the Proposal Option by NAICS Code................... 6-10

6-8. Cost-to-Receipt Ratio Results for the Alternative Option by NAICS Code............... 6-11

 6-9. Total Annual Cost (TAC) per Appliance Model – for Varying 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

x

 Annualized R&D Cycle Lifespans...........................................................6-12

 6-10. Cost-to-Sales Ratio Sensitivity Analysis Results Reflecting Different R&D 

 Cycle Lifespans for the Proposed Option by NAICS Code..............................6-13 

7-1. Human Health Effects of Ambient PM2.5 ..................................................................... 7-3

7-2. Summary of Monetized PM2.5-Related Health Benefits Estimates for the 

Proposed Residential Wood Heaters NSPS in the 2014–2022 Time Frame 

(2010$).......................................................................................................................... 7-9

7-3. Summary of Reductions in Health Incidences from PM2.5-Related Benefits for 

the Proposed Residential Wood Heaters NSPS in the 2014-2022 Time Frame ......... 7-10

7-4. All PM2.5 Benefits Estimates for the Proposed Residential Wood Heaters NSPS 

at Discount Rates of 3% and 7% for the 2014 to 2022 Time Frame ($2010 

millions)...................................................................................................................... 7-12

7-5. Population Exposure in the Baseline Above and Below Various Concentration 

Benchmarks in the Underlying Epidemiology Studies............................................... 7-15

8-1. Summary of the Monetized Benefits, Social Costs, and Net Benefits for the 

Proposed Residential Wood Heater NSPS in the 2014–2022 Time Frame ($2010 

millions)........................................................................................................................ 8-3

 8-2. Compliance Costs, Monetized Benefits, and Monetized Net Benefits (2010 dollars) by

 Source Category in the 2014-2022 Time Frame - Proposal Option ......................8-6

 8-3. Compliance Costs, Monetized Benefits, and Monetized Net Benefits (2010 dollars) by

 Source Category in the 2014-2022 Time Frame - Alternative Option...................8-7
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

1-1

SECTION 1

EXECUTIVE SUMMARY

The U.S. Environmental Protection Agency (EPA) is proposing to revise new source 

performance standards (NSPS) for residential wood stoves, and to issue NSPS for pellet stoves, 

furnaces, hydronic heaters, and masonry heaters. The EPA is proposing this revision under the 

authority of section 111 of the Clean Air Act (CAA), “Standards of Performance for New 

Stationary Sources,” under which the EPA establishes federal standards of performance for new 

sources within source categories which cause or contribute significantly to air pollution, which 

may reasonably be anticipated to endanger public health or welfare. We are proposing to amend 

40 CFR part 60, subpart AAA, Standards of Performance for New Residential Wood Heaters. 

The current regulation (subpart AAA) applies to affected facilities manufactured since 1988. 

Except as discussed in this proposal, the current requirements would remainin effect for the 

heaters/stoves and model lines manufactured before this proposal. We also propose to broaden 

the applicability of the wood heaters regulation beyond adjustable burn rate heaters (stoves, the 

focus of the original regulation) to specifically include single burn rate heaters, hydronic heaters, 

and pellet stoves. Heaters/stoves and model lines manufactured after the compliance dates would 

be required to meet particulate matter (PM) standards. Compliance upon the effective date of the 

final rule is the intention in section 111 of the CAA. 

Revision of the current residential wood heaters NSPS is necessary to capture the 

improvements in performance of such units and to include additional wood-burning residential 

heating devices. The proposed changes are expected to achieve several objectives, including the 

application of updated emission limits reflecting the best industry emission reduction systems; 

elimination of exemptions over a broad suite of residential wood combustion devices; the 

strengthening of test methods as appropriate; and the streamlining of the certification process.

This proposal does not include any requirements for heaters solely fired by gas, oil or coal. In 

addition, it does not include any requirements associated with wood heaters or other woodburning appliances that are already in use. The EPA continues to encourage state, local, tribal, 

and consumer efforts to change out (replace) older heaters with newer, cleaner, more efficient 

heaters, but that is not part of this Federal rulemaking. These proposed revisions help 

address the health impacts of particle pollution, of which wood smoke is a contributing factor in 

many areas. Particulate pollution from wood heaters is a significant national air pollution 

problem and human health issue. Health benefits associated with these proposed regulations are 

valued to be much greater than the cost to manufacture cleaner, lower emitting appliances. These

proposed regulations would also significantly reduce emissions of many other pollutants from 

these appliances, including carbon monoxide, volatile organic compounds, hazardous air 

pollutants and climate-forcing emissions. Emissions from wood stoves occur near ground level 

in residential communities across the country, and setting these new requirements for cleaner 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

1-2

stoves into the future will result in substantial reductions in exposure and improved public 

health.

Wood smoke contains a mixture of fine particles and toxic air pollutants (e.g., benzene 

and formaldehyde) that can cause burning eyes, runny nose, and bronchitis. Exposure to fine 

particles has been associated with a range of health effects, including aggravation of heart or 

respiratory problems, changes in lung function and increased respiratory symptoms, as well as 

premature death. Populations that are at greater risk for experiencing health effects related to fine 

particle exposures include older adults, children and individuals with pre-existing heart or lung 

disease. Each year smoke from wood heaters and fireplaces contributes hundreds of thousands of 

tons of fine particles throughout the country—mostly during the winter months. For more 

information on the health impacts from exposure to fine particles, please refer to Section 7 of this 

RIA. Nationally, residential wood combustion accounts for 44% of total stationary and mobile 

polycyclic organic matter (POM) emissions, nearly 25 percent of all area source air toxics cancer 

risks and 15 percent of noncancer respiratory effects. Residential wood smoke causes many 

counties in the U.S. to either exceed the EPA’s health-based national ambient air quality

standards (NAAQS) for fine particles or places them on the cusp of exceeding those standards.

For example, in places such as Keene, New Hampshire; Sacramento, California; Tacoma, 

Washington; and Fairbanks, Alaska; wood combustion can contribute over 50 percent of daily 

wintertime fine particle emissions. The concerns are heightened because wood stoves, hydronic 

heaters, and other heaters are often used around the clock in many residential areas. To the 

degree that older, dirtier, less efficient wood heaters are replaced by newer heaters that meet the 

requirements of this rule, or better, the emissions would be reduced, the efficiencies would be 

increased, and fewer health impacts should occur.

This is an economically significant rule as defined by Executive Order 12866 and 

Executive Order 13563. Therefore, EPA is required to develop a regulatory impact analysis 

(RIA) as part of the regulatory process. The RIA includes an economic impact analysis (EIA), a 

small entity impacts analysis, an engineering cost analysis, and a benefits analysis along with 

documentation for the methods and results.

We provide annualized average results for the time frame from 2014 to 2022 inclusive for 

two options: the Proposed option and an Alternative option. While the Proposed Option 

represents EPA’s preferred option, the Alternative Option is still under consideration. These 

options are described in detail in the preamble for the proposal and in Section 2 of this RIA and 

summarized in Section 4. The options vary in part by their respective dates of implementation, 

all of which are captured by the range of dates included in the analyses. We estimate the impacts 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

1-3

for the time frame from 2014 to 2022 in order to provide an average of annualized results for 

these options from the time of rule promulgation in 2014 to the time of full implementation of 

both options, which occurs by 2022. Because the potential environmental impacts can occur for 

40 years or more, the impacts for 40 years are also shown in Appendix A. The variability of 

annual impacts for each option provides an appropriate rationale for presenting impacts averaged 

over this time frame. All results in this RIA are presented in 2010 dollars. Estimates of benefits 

and costs are discounted to the analysis year using both a 7% and 3% discount rates following 

Circular A-4, “Regulatory Analysis,” which provides guidance to Federal agencies on the 

development of regulatory analyses required by Executive Order 12866.1

In addition, this proposal cannot be certified as not having a significant economic impact 

on a substantial number of small entities (SISNOSE) according to the provisions of the Small 

Business Regulatory Enforcement Fairness Act (SBREFA). Therefore, small entity impacts 

analysis presented in Section 6 is an Initial Regulatory Flexibility Analysis (IRFA). Section 6

also contains a summary of the proceedings and conclusions of a panel called to find ways to 

mitigate small entity impacts associated with this rule under the authority of the SBREFA.

1.1 Analysis Summary

The key results of the RIA are as follows:

 Engineering Cost Analysis: EPA estimates the revised NSPS’s total annualized cost 

to affected manufacturers on average in the 2014–2022 time frame will be $15.7 

million ($2010) for the Proposed option and $28.3 million (2010$) for the Alternative 

option, respectively, with the total annualized cost estimate at a 7% discount rate. At 

a 3% discount rate, the total annualized cost will be $14.8 million for the Proposed 

option and $26.9 million for the Alternative option.

 Economic Impact Analysis: The metric for economic impacts for industries affected 

by this Proposed option are industry-level average annualized compliance costs to 

receipts (or sales) ratios. This metric is calculated as an average in the 2014–2022 

time frame, and the estimates ranged from 4.3% for industries that produce wood 

stoves to as much as 6.4% for single burn rate stoves. For the Alternative option, the 

range is between 4.0% for forced air furnaces and 10.7% for single burn rate stoves. 

These results approximate the maximum price increase needed for a producer to fully 

recover the annual compliance costs and, therefore, do not presume any pass through 

of impacts to consumers. With pass through to consumers, these impact estimates will 

decline proportionately to the degree of pass through.

 

1 Circular A-4 is available at: http://www.whitehouse.gov/omb/circulars_a004_a-4
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

1-4

 Social Cost Analysis: For this RIA, the Agency assumes that the social cost is equal 

to the annualized cost to manufacturers. Therefore, the estimated average annual 

social cost of the Proposed and Alternative options in the 2014-2022 timeframe are 

expected to be $15.7 million and $14.8 million respectively when discounted at 7% , 

and $28.3 million and $26.9 million when discounted at 3%. See Section 5 of this 

RIA for more detail on the estimated social cost.

 Small Entity Analyses: EPA performed a screening analysis for impacts on small 

entities by comparing compliance costs to sales/revenues (e.g., sales and revenue 

tests). EPA’s analysis showed the tests were higher than 1% for small entities 

included in the screening analysis; the 1% test estimate is often an indicator for 

significant impacts to small firms. For these industries, almost all (more than 90%) 

affected entities are small firms. We concluded that we could not certify that there 

would not be a significant economic impact on a substantial number of small entities 

(SISNOSE) for either option considered in this RIA. Pursuant to section 603 of the 

RFA, EPA prepared an initial regulatory flexibility analysis (IRFA) for the proposed 

rule and convened a Small Business Advocacy Review Panel to obtain advice and 

recommendations of representatives of the regulated small entities. A detailed 

discussion of the Panel’s advice and recommendations is found in the final Panel 

Report (Docket ID No. EPA-HQ-OAR-2009-0734. A summary of the Panel’s 

recommendations is also presented in the preamble to the proposal. In the proposal, 

EPA included provisions consistent with several of the Panel’s recommendations. 

 Benefits Analysis: 

– Monetized benefits in this RIA include those from reducing particulate matter 

(PM). These benefits reflect reductions of nearly 4,800 tons annually of fine 

particulate matter (PM2.5) on average during the 2014–2022 time frame under 

each of the two options. All monetized benefits reported reflect improvements in 

ambient PM2.5 concentrations due to emission reductions of direct PM2.5. As a 

result, the monetized benefits likely underestimate the total benefits, however, the 

extent of the underestimate is unclear. Monetized benefits reflect those associated 

with reductions in premature mortality due to lower ambient PM2.5 concentrations 

resulting from implementation of the NSPS. Other benefits categories from PM2.5

reductions, such as changes in visibility, are assessed qualitatively in this analysis. 

– Using a 3% discount rate, we estimated the total monetized benefits of the 

Proposed and Alternative options to be $1.8 billion to $4.2 billion and $1.9 billion 

to $4.2 billion, respectively based on estimates by Krewski and Lepeule, in the 

2014–2022 time frame. Using a 7% discount rate, we estimate the total monetized 

benefits of the Proposed option to be $1.7 billion to $3.8 billion and $1.7 billion 

to $3.8 billion for the Alternative option in the 2014–2022 time frame. The 

benefits are almost identical for both options analyzed. Using alternative 

relationships between PM2.5 and premature mortality supplied by experts, higher 

and lower benefits estimates are plausible, but most of the expert-based estimates 

fall between these estimates. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

1-5

– The benefits from reducing some air pollutants have not been monetized in this 

analysis due to data and resource constraints, including reducing 33,000 tons of 

carbon monoxide (CO), over 3,200 tons of volatile organic compounds (VOCs), 

and undetermined amounts of black carbon and HAP emissions under each option 

analyzed. Data, resources, and methodological limitations prevented EPA from 

monetizing the benefits from these important benefit categories. We assessed the 

benefits of these emission reductions qualitatively in this RIA.

 Net Benefits: For the residential wood heater NSPS, the net benefits (benefits minus 

the costs) are $1.8 billion to $4.1 billion ($2010) at a 3% discount rate and $1.7 

billion to $3.7 billion ($2010) at a 7% discount rate for the Proposed option and $1.8 

billion to $4.2 billion ($2010) at a 3% discount rate and $1.7 billion to $3.8 billion 

($2010) at a 7% discount rate for the Alternative option in the 2014–2022 time frame. 

All net benefits are in 2010 dollars ($2010).

1.2 Organization of this Report

The remainder of this report supports and details the methodology and the results of the 

RIA:

 Section 2 describes the proposed regulation.

 Section 3 presents the profile of the affected industries.

 Section 4 describes the baseline emissions and emission reductions for the 

alternatives analyzed in this proposal.

 Section 5 describes the engineering costs, economic impacts, analyses to comply with 

Executive Orders, and employment impacts.

 Section 6 describes the small entity impact analyses and the Initial Regulatory

Flexibility Analysis (IRFA) prepared by EPA.

 Section 7 presents the benefits estimates.

 Section 8 presents the net benefits (benefits minus costs) for the alternatives analyzed 

in this proposal.

 Appendix A presents documentation on the cost analysis and estimates of costs and 

emission reductions for the proposal under each option beyond 2022. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

1-6

Table 1-1. Summary of the Monetized Benefits, Social Costs, and Net Benefits for the 

Proposed Residential Wood Heaters NSPS in the 2014–2022 Time Frame 

($2010 millions)

a

3% Discount Rate 7% Discount Rate

Proposed Option 

Total Monetized Benefitsb$1,800 To $4,200 $1,700 to $3,700

Total Social Costsc$15 $16

Net Benefits $1,800 To $4,100 $1,700 To $3,700

Nonmonetized Benefits 32,600 tons of CO

3,200 tons of VOC

Reduced exposure to HAPs, including formaldehyde, benzene, and polycyclic 

organic matter

Reduced Climate effects due to reduced black carbon emissions

Ecosystem effects 

Reduced visibility impairment 

Alternative Option

Total Monetized Benefitsb$1,900 To $4,200 $1,700 To $3,800

Total Social Costsc$27 $28

Net Benefits $1,800 To $4,200 $1,700 to $3,800

Nonmonetized Benefits 32,900 tons of CO

3,200 tons of VOC 

Reduced exposure to HAPs, including formaldehyde, benzene, and polycyclic 

organic matter

Reduced Climate effects due to reduced black carbon emissions

Ecosystem effects 

Reduced visibility impairment 

a All estimates reflect average annual estimates for the time frame from 2014 to 2022 inclusive, and are rounded to 

two significant figures. These results include appliances anticipated to come online and the lowest cost disposal 

assumption. Total annualized costs are estimated at a 7% and at a 3% interest rate.

b The total monetized benefits reflect the human health benefits associated with reducing exposure to PM2.5 through 

reductions of directly emitted PM2.5. It is important to note that the monetized benefits include many but not all 

health effects associated with PM2.5 exposure. Benefits are shown as a range from Kreuski et al. (2009) to Lapeule

et al. (2012). These models assume that all fine particles, regardless of their chemical composition, are equally 

potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation 

of effect estimates by particle type. Because these estimates were generated using benefit-per-ton estimates, we do 

not break down the total monetized benefits into specific components here. See Figure 7-1 for an illustration of 

the breakdown, or the RIA for the final Cross-States Air Pollution Rule (EPA, 2011) for more information. 

c The annualized social costs are $14.8 million for the Proposed option at a 3% discount rate and $26.9 million for 

the Alternative option when calculated at a 7% interest rate.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-1

SECTION 2

INTRODUCTION

2.1 Background for Proposed Rule

EPA is considering amending the New Source Performance Standard (NSPS) for new 

residential wood heaters. EPA promulgated the original NSPS for new residential wood heaters 

including wood stoves in 1988. Based on a review of the NSPS in 2009, EPA noted significant 

technological improvements that allow emissions from these sources to be better controlled than 

the current standard. Residential Wood remains one of the five largest categories of PM 

emissions according to the 2008 National Emissions Inventory.

2

Thus, EPA is proposing to 

revise the current NSPS standards to improve regulation of wood heaters and broaden the new 

regulation to cover other residential heating devices. Specifically, EPA is proposing to amend 

subpart AAA, Standards of Performance for New Residential Wood Heaters. We are also 

proposing two new subparts to address additional types of wood heating appliances—subpart 

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

Furnaces, and subpart RRRR, Standards of Performance for New Masonry Furnaces. The 

following sections describe the major proposed provisions of each subpart. Full details on the 

proposed provisions in each of these subparts can be found in the preamble for this proposal. 

2.2 Room Heaters 

The current wood heaters regulation (subpart AAA) applies to adjustable burn rate wood 

heaters/stoves manufactured since 1988. We propose to broaden the applicability of the wood 

heaters regulation beyond adjustable burn rate wood heaters (the focus of the original regulation) 

to also specifically include single burn rate wood heaters, and pellet heaters/stoves. These and 

any other affected appliance would be covered in subpart AAA as a “room heater.” We believe 

this “room heater” categorization better describes the appliances potentially affected under 

subpart AAA and included in this proposal. Note that this RIA and the proposal use the 

following terms interchangeably: heaters, stoves, and heaters/stoves. The current emission limits 

under subpart AAA would remain in effect for the heaters/stoves and model lines manufactured 

before the effective date of the final rule until their current EPA certification expires (maximum 

of 5 years) or is revoked. After the certification expires or is revoked, these heaters and other 

new heaters would have to meet updated emission standards. The proposed subpart AAA 

exempts new residential hydronic heaters, new residential forced-air furnaces, and new 

residential masonry heaters because they would be subject to their own subparts. The proposed 

 

2 U.S. EPA, 2008 National Emissions Inventory. Accessed on Sept. 11, 2012. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-2

subpart AAA retains the exemption for fireplaces, strengthens the definition for “cookstoves,”

and adds definitions for “camp stoves” and “traditional Native American bake ovens” to clarify

that they would not be subject to the standard other than a requirement for appropriate labeling 

for cookstoves and camp stoves. Finally, the proposal clarifies that the emission limits would 

only apply to wood-burning devices (i.e., not to devices that solely burn fuels other than wood, 

e.g., gas or oil or coal or other biomass). . In addition, this proposal does not include any

requirements associated with wood heaters or other wood-burning appliances that are already in 

use. The EPA continues to encourage state, local, tribal, and consumer efforts to change out 

(replace) older heaters with newer, cleaner, more efficient heaters, but that is not part of this 

Federal rulemaking.

NSPS determinations of the best system of emission reductions (BSER), formerly

referred to as best demonstrated technology (BDT), must consider costs (see section II of the 

preamble for more detail). The fact that this rule applies to consumer products manufactured for 

sale results in cost considerations that are fundamentally different from most NSPS. Specifically, 

the cost of potential lost revenues if production and sales had to be suspended while designing 

and certifying cleaner models would be significant and necessitates reasonable, phased 

implementation of emission limits. This was true in 1988 and is still true today. Thus, we 

propose having a transition period so that stoves with currently effective EPA certification can 

continue to be manufactured until the current certification expires (5 years from date of 

certification) or is revoked by the Administrator, whichever date is earlier. Renewal of these 

certifications would not be permitted. That is, in the near term, we are proposing to retain the 

current 1990 PM emission limits for adjustable burn rate wood heaters and pellet stoves with a 

current EPA certification issued prior to the effective date of the final rule. While EPA’s top 

priorities are to ensure that emission reductions occur in a timely manner and that there is no 

backsliding from the improvements that many manufacturers have already made, we have also 

sought to avoid unreasonable economic impacts on those manufacturers (over 95% of which are 

small businesses) who need additional time to develop, test, field evaluate, and certify a full 

range of cleaner models across their consumer product lines. In 1988, there were “logjam” 

concerns about the capacity of accredited laboratories to conduct certifications tests and the time 

for the EPA to review the tests and adequately assure compliance if all the NSPS requirements 

were to be immediate. Those concerns have been expressed this time also. The proposed phased 

implementation appraoch would help reduce those concerns. We ask for specific comments on 

the length of this proposed transition and the degree to which there would be any critical 

economic impacts on manufacturers who have heaters with current certifications if we were to 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-3

allow less than the full 5-year certification period for model lines certified prior to the effective 

date of this rule but the heaters are manufactured after the effective date of the final rule. 

We are proposing a two-step, phased implementation approach (referred to herein as the 

“Proposed Approach”) that would apply to all new adjustable burn rate wood heaters, single burn 

rate wood heaters and pellet heaters/stoves required to comply with the Step 1 emission limits 

specified in the final rule. Under today’s Proposed Approach, the Step 1 emision limits would 

apply to each heater (1) manufactured on or after the effective date of the final rule or (2) sold at 

retail on or after 6 months after the effective date of the final rule. Step 2 emission limits would 

apply to each adjustable rate wood heater, single burn rate wood heater and pellet heater/stove

manufactured or sold 5 years after the effective date of the final rule. We ask for specific 

comments on the Proposed Approach and the degree to which these dates could be sooner. 

We are also asking for comments on an alternative three-step approach (referred to herein 

as the “Alternative Approach”) for all adjustable rate wood heaters, single burn rate wood 

heaters and pellet heaters/stoves.. Under this Alternative Approach, Alternative Step 1 emission 

limits would apply to each heater (1) manufactured on or after the effective date of the final rule

or (2) sold at retail on or after 6 months after the effective date of the final rule. The emission 

levels for Step 1 and Alternative Step 1 are identical. Alternative Step 2 emission limits would 

apply to each heater manufactured or sold on or after the date 3 years after the effective date of 

the final rule.. Alternative Step 3 emission limits would apply to each heater manufactured or 

sold on or after the date 8 years after the effective date of the final rule. The Proposed Approach 

Step 2 emission limits and the Alternative Approach Step 3 emission limits are identical. We ask 

for specific comments on this Alternative Approach and the degree to which these dates could be 

sooner.

While the 1988 promulgated subpart AAA (53 FR 5860, February 26, 1988) included an 

additional 1-year compliance extension for low volume manufacturers, i.e., companies that

manufacture (or export to the U.S.) fewer than 2,000 heaters per year, this proposal does not 

include such a compliance extension. We are not proposing to extend this delay to adjustable 

burn rate wood heaters or pellet heaters/stoves, because most of these appliances already meet 

the proposed Step 1 emission levels. See section V.C. of the preamble for more discussion of this 

topic. However, we are requesting comments on the possible need for such a compliance 

extension for single burn rate wood heaters, which are not subject to the current subpart AAA 

requirements.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-4

Table 2-1 summarizes the compliance deadlines and PM emissions standards that would 

apply to each wood heater appliance under the Proposed Approach. Table 2-2 summarizes the

compliance deadlines and PM emissions standards that would apply to each wood heater 

appliance under the Alternative Approach. 

Table 2-1. Proposed Approach Subpart AAA Compliance Deadlines and PM Emissions 

Limits

Appliance Compliance Deadlines

PM

Emissions Limit

Adjustable Rate Wood Heaters 

or Pellet Stoves with Current 

EPA Certification Issued Prior 

to Publication of Final Rule

Transition period from 1988 rule 

through the later of publication of final 

revised rule or expiration of current 

certification (maximum of 5 years 

certification and no renewal)

4.1 g/hr for catalytic stoves and 7.5 

g/hr for noncatalytic stoves

All Other Adjustable Rate 

Wood Heaters, Single Burn 

Rate Wood Heaters or Pellet 

Stoves (includes currently 

certified heaters after the 

certification expires, catalytic 

and noncatalytic) 

Step 1: upon effective date of final rule)

Step 2: 5 years after effective date n of 

final rule)

4.5 g/hr

1.3 g/hr

Table 2-2. Alternative Approach Subpart AAA Compliance Deadlines and PM Emissions 

Limits

Appliance Compliance Deadlines

PM

Emissions Limit

Adjustable Rate Wood Heaters 

or Pellet Stoves with Current 

EPA Certification Issued Prior 

to Publication of Final Rule

Transition period from 1988 rule through the 

later of publication of final revised rule or 

expiration of current certification (maximum of 

5 years certification and no renewal)

4.1 g/hr for catalytic stoves 

and 7.5 g/hr for noncatalytic 

stoves

All Other Adjustable Rate 

Wood Heaters, Single Burn 

Rate Wood Heaters or Pellet 

Stoves (includes currently 

certified heaters after the 

certification expires, catalytic 

and noncatalytic) 

Step 1: upon effective date of final rule

Step 2: 3 years after effective date of final rule)

Step 3: 8 years after effective date of final 

rule)

4.5 g/hr 

2.5 g/hr

1.3 g/hr

We are proposing to have a single determination of BSER for both catalytic and 

noncatalytic heater systems. As in 1988, the EPA again considered requiring catalyst 

replacement on a regular schedule but determined that enforcement of such a requirement would 

be difficult. As before, we are proposing to require manufacturers to provide warranties on the 

catalysts and prohibit the operation of catalytic stoves without a catalyst. In addition, we are
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-5

proposing to require warranties for noncatalytic stoves. We are not proposing efficiency

standards at this time, however, we are proposing to require testing and reporting of these data.

We are also proposing to require emission testing and reporting based on both crib wood 

and cordwood for Step 1, while allowing manufacturers to choose whether to certify with crib 

wood or cordwood for Step 1. For Step 2, we are requiring certifying with cordwood only. “Crib 

wood” is a specified configuration and quality of dimensional lumber and spacers that was 

intended to improve the repeatability of the test method required in the current Residential Wood 

Heaters NSPS promulgated in 1988. “Cord wood” is a different specified configuration and 

quality of wood that is intended today to more closely resemble what a typical homeowner 

would use.

Our current data for CO emissions performance and methods of control are not 

sufficiently robust to support strong CO emission limits, and it would delay the NSPS if we were 

to seek additional data elsewhere at this time to support strong CO emission limits. Although we 

lack sufficient data to propose a separate CO emissions standard at this time, we propose to 

require that the manufacturer determine CO emissions during the compliance test and report 

those results to the EPA. We specifically request emission and cost data for systems that reduce 

CO emissions. If those systems warrant inclusion in the determination of BSER, we would 

consider doing so. Also, we ask for specific comments on whether we should require indoor CO 

monitors as a critical safety component for heaters installed in occupied buildings or other 

buildings or enclosures in which the operator would enter to add fuel to the heater or conduct 

other normal operation and maintenance of the heater.

Like the current subpart, the EPA is using its authority under Section 114 of the CAA to 

require each manufacturer to submit certifications of compliance with this rule for all models and 

all units. As in the 1988 rule, provided that the certifications are timely, complete, and accurate, 

the EPA will allow certification of compliance with the PM emissions standards to be 

determined based on testing of a representative unit within the model line rather than testing 

every unit. As in 1988, the cost of testing each unit would be an order of magnitude greater than 

the cost of a wood stove and would be economically prohibitive. Also, as in 1988, the testing of 

each unit could create a potential “logjam” that would stymie the certification of cleaner model 

lines. We recognize there is some concern that testing laboratories may not be able to meet the 

demand for certification tests in the first few years. However, the availability of additional ISOaccredited labs, the advance notice that industry has had concerning the NSPS prior to this

proposal, and the time between this proposal and the proposed implementation deadlines of the 

final rule, should ensure that adequate compliance certification resources are available. In 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-6

addition, to further respond to the concern regarding availability of testing laboratories, the 

proposed subpart expands the definition of “Accredited Test Laboratory” from just EPAaccredited laboratories to allow laboratories accredited by a nationally recognized accrediting 

body to perform testing for each of the test methods specified in this NSPS under ISO-IEC4

Standard 17025 to conduct the certification testing. The laboratories would have to register their 

credentials with the EPA and report any changes in their accreditation and any deficiencies found 

under ISO 17025. The EPA would review that information to approve (or deny or revoke) the 

accreditation for the purpose of the determining compliance with the NSPS prior to the lab 

conducting any certification testing or related work used as a basis for compliance with this rule.

To ensure a practical, orderly transition, the proposal retains the current “Administrator 

Approval Process” to review the certification application, including test results, for the first year 

following publication of the final rule. At that point or earlier if chosen by manufacturers, the 

revised subpart would implement a “Certifying-Body-Based Certification Process.” Under this 

process, after testing is complete, a certification of conformity with the PM emissions standards 

must be issued by a certifying body with whom the manufacturer has entered into contract for 

certification services. Similar to the lab requirements, the certification body would have to be 

accredited under ISO-IEC Standard 17065 and register their credentials with EPA and report any 

changes in their accreditation and any deficiencies found under ISO 17065. The EPA would 

review that information to approve (or deny or revoke) the accreditation for the purpose of the 

determining compliance with the NSPS prior to the lab conducting any certification testing or 

related work used as a basis for compliance with this rule. Upon review of the test report and 

quality control plan submitted by the manufacturer, the approved certifying body may certify

compliance and submit the required documentation to the EPA’s Office of Enforcement and 

Compliance Assurance for review, approval and listing of the certified appliance.

As in the 1988 NSPS, each affected unit would be required to have an applicable 

permanent label and have an owner’s manual that contains specified information. We are 

proposing that permanent labels be required for each affected unit effective on the date of 

publication of the final rule. We proposing to no longer require showroom temporary labels 

(“hangtags”) for each affected unit. This is a change from the existing 1988 NSPS, which 

requires that all certified models be equipped with temporary hangtags. The intent of the 1988 

temporary hangtag requirement was to highlight models that met the EPA standards. We believe 

 

4

ISO, the International Organization for Standardization, and IEC, the International Electrotechnical Commission, 

prepare and publish international standards.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-7

adequate information on EPA certifications would be available on the EPA Burn Wise website, 

the permanent label and the owner’s manual. The proposal would clarify that the permanent label 

must be installed so that it is readily visible both prior to and after the unit is installed. This 

clarification is needed to document the use of complying heaters required by state and local rules 

and/or to determine the unit’s applicability to any future changeout programs.

We request specific comments on how to best assure that manufacturers and retailers and online 

marketers of wood heaters only use valid certification test data and that regulators and consumers 

have ready access to certification information. We request specific comments on ways to 

improve the delivery of information and on whether different information might be useful to the 

consumer and to the regulatory authorities. We also request specific comments on what 

information and format might be most useful for the EPA to include on the EPA Burn wise 

website, EPA’s web portal for information on residential wood smoke emissions and ways to 

reduce them, and wood burning appliances.

In addition to the PM emissions standards, certification and labeling requirements, we are 

proposing to continue to require the proper burn practices that already apply to the owner or 

operator of a wood heating appliance. That is, the 1988 standards already include the 

requirement that the owner or operator must operate the heater consistent with the owner’s 

manual and not burn improper fuels. The proposed revision clarifies that the current requirement 

to operate according to the owner’s manual must continue to include a list of prohibited fuel 

types that create poor or even hazardous combustion conditions and must include the direction 

that pellet fuel appliances can be safely and effectively operated only with pellet fuels used in the 

certification tests. We propose that pellets for the certification tests be only those that have been 

produced under a licensing agreement with the Pellet Fuels Institute (PFI), or equivalent (after 

request and subsequent approval by the EPA), to meet certain minimum requirements and 

procedures for a quality assurance process.5(Currently, PFI is the only organization that has 

volunteered to conduct such a program.) We believe that these provisions are necessary to ensure 

that the appliances operate properly such that emissions are reduced as intended. We ask for 

specific comments on whether we should include other requirements of best burn practices or 

adjustments to help ensure proper operation, e.g., chimney height and draft specifications, 

moisture content of wood, and limits on visible emissions.

 

5 Details of the PFI program are available at http://pelletheat.org/pfi-standards/pfi-standards-program/.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-8

The proposed subpart still contains the crucial quality assurance provisions in the 1988

NSPS. The 1988 NSPS requirements for manufacturer quality assurance programs would be 

maintained for 1 year following the effective date of the final rule. At that point, the 

manufacturer would be required to adopt a Certifying-Body-Based Quality Assurance program. 

The Certifying Body would conduct regular, unannounced audits to ensure that the 

manufacturer’s Quality Control Plan is being implemented properly.

The concepts of the EPA selective enforcement and random audit testing programs of the 

current 1988 NSPS will be retained under the Proposed rule, although they will be streamlined 

and simplified to better ensure compliance and to clarify that enforcement audits can be based on 

any information the EPA has available and do not have to be statistically random. Also, we 

clarify that the EPA and states are allowed to be present during the audits and that states may

provide the EPA with information to help the EPA compliance assurance efforts. 

The EPA is proposing a number of revisions to certification testing for various 

appliances. The EPA is proposing that updated and tailored versions of Method 28, a sampling 

and analysis method to analyze wood stove emissions, be used for all of the appliances in this 

rulemaking. The EPA developed Method 28 in 1987 and 1988 as part of our efforts on the 1988

NSPS. The manufacturers, laboratories, states, and the EPA have now had over 25 years of 

experience with Method 28 and it has been very useful for certifying hundreds of model lines of 

wood stoves. We asked the manufacturers, EPA-accredited laboratories, and states for their 

insights on Method 28. Many stakeholders agree that changes should be made to improve the 

reproducibility and repeatability of the test procedures and to address concerns about how to best 

ensure protection across the entire U.S. when various operating scenarios are used and various 

wood species and densities are used. For example, to address some of these concerns, ASTM, 

formerly known as the American Society for Testing and Materials, has used a “consensusbased” process to develop E2515-10 “Standard Method for Determination of Particulate Matter 

Emissions in a Dilution Tunnel.” As with all test methods, there are opportunities for continual 

improvement, and the EPA requests specific comments and supporting data for additional 

potential improvements to E2515-10. 

A number of states have expressed concern about ASTM’s Intellectual Property Policy

which requires all participants to give their intellectual property rights to ASTM so that, in turn,

ASTM can control distribution of the drafts and final test methods and sell the final test methods 

to potential users. Attorneys General for several states have indicated that state employees in 

their states cannot give to ASTM the property rights for property that their states paid for via the 

employee salaries and other expenditures and thus cannot participate in ASTM’s “consensus-
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-9

based” process. For this rulemaking, ASTM is allowing public review, for no charge, of the 

ASTM test methods and draft work products relevant to this proposed rule at 

www.astm.org/epa.The EPA requests specific comments and supporting data on the substance of 

all of the test methods relevant to this rulemaking and specific comments on the ASTM process 

and ways to ameliorate the process concerns.

ASTM methods E2779-10 “Standard Test Method for Determining Particulate Emissions 

from Pellet Heaters” and E2780-10 “Standard Test Method for Determining Particulate 

Emissions from Wood Heaters”, which are test methods used to determine average emissions 

rates and average emissions factors for pellet heaters/stoves and wood heaters/stoves, 

respectively, could potentially replace the wood heater fueling and operation requirements in 

Method 28 for these heaters. Note that ASTM intends to use the same E2515-10 for the sampling 

and analysis portion for all the appliances and then separate methods per appliance types for the 

fueling and operation portions of these methods. The EPA believes that E2779-10 is a sound 

method for measuring emissions from pellet stoves and includes reasonable measures to reduce 

testing costs for continuously-fed appliances and today we are proposing its use. However, 

because, as noted earlier, some states were not able to participate in the ASTM method 

development process, we specifically request comments and supporting data of all aspects of not 

only this test method but also all the proposed methods as part of the comments on today’s 

proposed rule. 

Similarly, the EPA believes that ASTM Method E2780-10 includes improvements for 

testing adjustable and single burn rate wood heaters, and we are proposing many of those 

improvements. For example, we are proposing the use of the E2780-10 appendix for testing 

single burn rate appliances. However, we, and some states, do not agree with all the changes that 

ASTM has made for adjustable burn rate wood heaters, and some provisions are not as protective 

as we, and some states, now believe they need to be. As noted above, several states are 

concerned about how to best ensure that the methods are protective for the entire U.S., 

considering differences in wood species, density, and homeowner operation. The EPA and the 

states are particularly concerned about scenarios in which stoves will have higher emissions in 

homes than the emissions measured in the laboratories. For example, the states and the EPA are 

concerned about the ASTM changes on burn rate categories, i.e., easing or eliminating the lowest 

burn rates that often occur in home operations and are typically the dirtiest and least efficient. 

The EPA is asking for specific comments on these issues and recommendations and supporting 

data for other changes.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-10

In addition, ASTM has developed a draft test method that uses cordwood rather than crib 

wood to better represent real world conditions. All stakeholders agree that a test method that 

better represents real world conditions would be a significant improvement and help ameliorate 

concerns that some heaters do not perform as well in the field as they do in laboratories. We are 

also interested in real-time emission test methods that measure cold or warm start-up emissions 

and emission peaks/durations. We are also interested in field test methods and less expensive test 

methods that regulators and neighbor can use to better quantify impacts in the real world. The 

EPA is asking for specific comments and data on all these potential methods, issues and 

recommendations.

2.3 Central Heaters: Hydronic Heaters and Forced-Air Furnaces

The proposed subpart QQQQ would apply to new wood-fired residential hydronic heaters 

and forced-air furnaces and any other affected appliance as defined in proposed subpart QQQQ 

as a “central heater.” These appliances are described in more detail in Section 3 of this RIA. We 

believe this “central heater” categorization will ensure that all appliances potentially affected 

under the proposed subpart QQQQ are properly included. The proposed provisions of subpart 

QQQQ would apply to each affected unit that is manufactured or sold on the effective date of 

the final rule. This proposal does not include any requirements for heaters that are fueled solely 

by gas or oil or coal or non-wood biomass. In addition, this proposal does not include any 

requirements associated with wood heaters that are already in use. The EPA continues to 

encourage state, local, tribal, and consumer efforts to change out (replace) older heaters with 

newer, cleaner, more efficient heaters, but that is not part of this Federal rulemaking.

The Proposed Approach (or Option) would apply to new residential hydronic heaters and 

forced-air furnaces. Under the Proposed Approach, the Proposed Step 1 emission limit would be 

upon the effective date of the final rule. The Proposed Step 2 emission limit would be 5 years 

after the effective date of the final rule. We ask for specific comments on the Proposed Approach 

and the degree to which these dates could be sooner.

We also considered an alternative three-step approach (Alternative Approach or Option) 

for residential hydronic heaters and forced air heaters. As in the Proposed Approach, under this 

Alternative Approach, the Alternative Step 1 emission limit would be upon the effective date of 

the final rule. The Proposed Step 1 emission limit and the Alternative Approach Step 1 emission 

limit are identical. The Alternative Step 2 emission limit would be 3 years after the effective date

of the final rule. This serves as an “interim” step on the way to the tighter emissions limits 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-11

included in Alternative Step 3. The Alternative Step 3 emission limit would be 8 years after the 

effective date of the final rule. The Proposed Step 2 emission limit and the Alternative Approach 

Step 3 emission limit are identical. We ask for specific comments on this Alternative Approach 

and the degree to which these dates could be sooner.

Table 2-3 summarizes the proposed compliance dates and PM emissions standards that 

would apply under the Proposed Approach. Table 2-4 summarizes the compliance dates and PM 

emissions standards that would apply under the Alternative Approach. Similar to subpart AAA, 

we are not proposing a standard for CO or efficiency, but are proposing to require manufacturers 

to collect and report CO emissions and efficiency data during certification tests.

Table 2-3. Proposed Approach Subpart QQQQ Compliance Dates and PM Emissions 

Standards

Appliance Compliance Date Particulate Matter Emissions Limits

Residential Hydronic 

Heater

Step 1:Upon effective date of the final 

rule) 

Step 2: 5 years after effective date of 

the final rule)

0.32 lb/MMBtu heat output and a cap of 7.5 

g/hr for individual test runs

0.06 lb/MMBtu

Forced-Air Furnace Step 1: Upon effective date of the final 

rule) 

Step 2: 5 years after effective date of 

final rule)

0.93 lb/MMBtu

0.06 lb/MMBtu

Table 2-4. Alternative Approach Subpart QQQQ Compliance Dates and PM Emissions 

Standards

Appliance Compliance Date Particulate Matter Emissions Limits

Residential Hydronic Heater Step 1:Upon effective date of the 

final rule) 

Step 2: (3 years after effective date 

of final rule)

Step 3: 8 years after effective date 

of the final rule)

0.32 lb/MMBtu heat output and a cap of 

7.5 g/hr for individual test runs

0.15 lb/MMBt

0.06 lb/MMBtu

Forced-Air Furnace Step 1: Upon effective date of the 

final rule) 

Step 2: 3 years after effective date 

of final rule)

0.93 lb/MMBtu

0.15 lb/MMBtu
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-12

Step 3: 2022 (8 years after 

publication of final rule)

0.06 lb/MMBtu

Unlike the subpart AAA requirements, the subpart QQQQ requirements would not 

provide an additional time period for the sale of unsold units manufactured before the 

compliance date nor do they include a small volume manufacturer compliance extension.6 We 

ask for comments on the timing for implementation.

As in the current subpart AAAfor wood heaters/stoves, we are proposing a list of 

prohibited fuels because their use would cause poor combustion or even hazardous conditions. 

We request comment on these requirements and data to support additional requirements, if 

warranted. Also, as in the current subpart AAA for wood heaters/stoves, we are proposing that 

the owner or operator must not operate the hydronic heater or forced-air furnace in a manner that 

is inconsistent with the owner’s manual. For pellet-fueled appliances, the proposal makes it clear 

that operation according to the owner’s manual includes operation only with pellet fuels that 

have been used in the certification test and have been graded and marked under a licensing 

agreement with the PFI, or equivalent (after request and subsequent approval by the EPA), to 

meet certain minimum requirements and procedures for a quality assurance process. Details of 

the PFI program are available at http://pelletheat.org/pfi-standards/pfi-standards-program/.

(Currently, PFI is the only organization that has volunteered to conduct such a program.) We 

believe that these provisions are necessary to ensure that the appliances operate properly such 

that emissions are reduced as intended. We ask for specific comments on the use of the PFI 

program and the PFI specifications, especially the degree to which the PFI program will 

adequately ensure the absence of construction and demolition waste (and associated toxic 

contaminants) in pellets. 

The proposed permanent labels and owner’s manual requirements are similar to the 

guidelines in the EPA’s current voluntary hydronic heater program with some improvements. 

We provide information on the number of models that currently meet the limits in the voluntary

hydronic heater program in Section 4. We request specific comments on ways to improve the 

delivery of information on the permanent labels and in the owner’s manual and the Burn Wise 

website and whether additional information might be useful to the consumers and to the 

regulatory authorities.

 

6

See section V.C. of the preamble for more discussion of this topic.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-13

The structure of the rest of the proposed subpart QQQQ is similar to the proposed subpart 

AAA certification and quality assurance process. We request specific comments on changes or 

improvements to that process that might be needed to address any special concerns related to the 

certification of hydronic heaters and forced-air furnaces.

The EPA developed Method 28 OWHH (outdoor wood hydronic heaters) in 2006 as part 

of our efforts for voluntary qualification of cleaner hydronic heaters. We received input at that 

time from manufacturers, laboratories, and some states in order to quickly develop a mostly 

consensus-based method that we incorporated into the program partnership agreements. We used 

Method 28 for wood stoves as the foundation, and thus, Method 28 OWHH has many aspects 

similar to Method 28. Three significant differences are (1) Method 28 OWHH uses larger cribs 

because hydronic heater fireboxes are typically much larger than wood heater fireboxes, (2) 

Method 28 OWHH uses red oak instead of Douglas fir because red oak is the more common fuel 

in the U.S., and (3) Method 28 OWHH includes procedures for determining 8-hour heat output 

and efficiency. The manufacturers, laboratories, states, and the EPA have now had over 7 years 

of experience with Method 28 OWHH and its successor Method 28 WHH (wood hydronic 

heaters, improved and expanded to include indoor heaters, not just outdoor heaters).

All the stakeholders that have provided input on the test methods agree that the methods 

should be thoroughly vetted and changed as necessary to improve the methods’ accuracy and 

precision and to address concerns about how to best ensure real world protection across the 

entire U.S. when various operating scenarios and wood species and densities are used. ASTM 

has developed E2618-09, a test method that applies to wood-fired hydronic heaters, to address 

some of these concerns, and the EPA believes that E2618-09 does include some improvements. 

However, as with the wood stove methods, we and some states do not agree with all the changes 

that ASTM has made. For example, the states of Washington and Oregon are very concerned that 

Method 28 WHH and ASTM E2618-09 do not specify fueling with Douglas fir, which is used in 

EPA Method 28 for wood stoves and which these states require in their regulations for 

residential wood heaters, including hydronic heaters, and is used frequently in their states for fuel 

in the real world. They are concerned that hydronic heaters tested with red oak will have higher 

emissions when fueled with Douglas fir and other less dense species typical in their states. Also, 

a number of states and the EPA are concerned about the ASTM changes to the burn rate 

categories, i.e., easing or eliminating testing at the lowest burn rates which often occur in home 

operations and are typically the dirtiest and least efficient. For several years, we have been 

communicating with European certification laboratories to learn how they conduct their tests 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-14

under EN 303-5, a European Union test protocol for wood-burning appliances, and to consider if 

incorporating some of their testing procedures might improve our test methods.

More recently, because of initial concerns about some surprisingly high laboratory test 

efficiencies for a couple of the EPA voluntary program Phase 2 qualified partial heat storage 

models, the EPA, the Northeast states that regulate hydronic heaters, laboratories (including 

EPA-accredited laboratories and Brookhaven National Laboratory), and manufacturers have 

conducted an exhaustive review of voluntary program qualifying test reports. All of the 

stakeholders that provided input on the test methods agree that we need a change in the test 

method for testing of non-integral partial heat storage models (i.e., models that have separate 

heat storage but the storage does not have the capacity to safely handle all the heat generated by 

a full load of fuel). ASTM has been leading an effort to develop an Appendix X2 , which is 

additional guidance as support, to the test method for such models but has not completed that 

effort as of today’s proposal. Brookhaven National Laboratory has recommended a method to the 

New York State Department of Environmental Conservation (NYSDEC) and NYSDEC is using 

that method for certification of such models in their state. EPA is proposing that method be used 

for certification of the NSPS for hydronic heaters equipped with a heat storage unit.7

Further, we are proposing revisions to Method 28 WHH that would require that all 

affected non-pellet hydronic heaters, subject to new subpart QQQQ, conduct and report 

certification testing using both crib wood and cordwood for the Step 1 emission limits and then 

choose which they want to use for compliance. For other than pellet-fueled heaters, the 

compliance tests would be solely cordwood for the Step 2 emission limits. 

We are asking for specific comments on whether the EPA should use (1) one or more of 

the draft versions of Appendix X2 being considered as part of ASTM work product WK26581, 

which is a revision to the existing E2618-09 test method for measuring emissions from outdoor 

hydronic heaters; (2) the European Union test method EN 303-05 as the Maine Department of 

Environmental Protection approved for certification of hydronic heaters in their state as 

equivalent to the EPA Method 28 WHH; (3) the use of the NYSDEC partial thermal storage test 

method; and/or (4) some other test method. For use of any of the test methods, the EPA would 

require that the amount of heat storage for the actual sale and installation of the hydronic heaters 

be no less than the amount used for the certification tests. Because EN303-05 does not currently

utilize heat storage during the certification test, if the EPA were to use EN303-05 test results, the 

 

7

See footnote 19.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-15

EPA would require the installed heater to have heat storage that can safely handle at least 60% of 

the maximum heat output of the heater or a greater level if the manufacturer specifies a greater 

level. The EPA is asking for specific comments on the appropriateness of this heat storage level 

or other levels. The EPA will consider any or all of these options as the preferred reference test 

methods or as acceptable emission testing alternatives. (ASTM previously developed an 

Appendix X1, an additional part to the test protocol, for testing of models that have “full” heat 

storage that can safely accept the heat from the full load of fuel.) We request comments on all 

aspects of heater testing and are especially interested in emission test data that compare the 

results for testing by these different methods.

The exhaustive review discussed above found a number of areas in the methods to 

improve the quality of the data and reduce anomalies. In June 2011, the voluntary program 

stakeholders agreed to a number of changes to Method 28 OWHH, and we are proposing the 

revised method today as EPA Reference Method 28 WHH. The EPA is asking for specific 

comments on this method and recommendations and supporting data for other changes or 

acceptable alternatives. Additional information on the EPA methods is available at 

www.epa.gov/burnwise and the ASTM methods and draft work products are available at 

www.astm.org/epa.

As for wood heaters/stoves under Subpart AAA, ASTM is developing hydronic heater 

test methods that use cordwood instead of crib wood in order to better represent real world 

conditions. The proposed Step 2 of subpart QQQQ will require testing using cord wood. The 

EPA requests specific comments and data to support the ASTM cord wood methods and/or other 

cord wood test methods.

The EPA is proposing to rely on the test method B415.1-10 that has been developed by 

the Canadian Standards Association (CSA) for forced-air furnaces. All CSA standards are 

developed through a consensus development process approved by the Standards Council of 

Canada This process brings together volunteers representing varied viewpoints and interests to 

achieve consensus and develop a standard. CSA worked for years on development of this test 

method that has its roots in earlier U.S. efforts on wood stoves. The current version of CSA 

B415.1-10 was published in March 2010, and it includes not only the forced-air furnace test 

method but also new Canadian emission performance specifications for indoor and outdoor 

central heating appliances.

Although the CSA B415.1-10 technical committee included 32 individuals, including 

numerous U.S. manufacturers and laboratories, it did not include any states or environmental 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-16

groups, and the EPA participation was minimal. Nevertheless, we are satisfied that this CSA 

method warrants proposal for this rulemaking and we request specific comments and supporting 

data. We ask for specific comments on the appropriateness of using the CSA test method in its 

entirety, including the use of cordwood instead of cribs that are used in current versions of 

Method 28 and Method 28 WHH. To review the CSA test method, please go to www.csa.ca.

2.4 New Residential Masonry Heaters

The proposed subpart RRRR would apply to new residential masonry heaters. A 

masonry heater is a site-built or site-assembled, solid-fueled heating device constructed mainly 

of masonry materials in which the heat from intermittent fires burned rapidly in its firebox is 

stored in its massive structure for slow release to the building. It has an interior construction 

consisting of a firebox and heat exchange channels built from refractory components.. We are 

proposing that, as of the effective date of the final rule, no person would manufacture or sell a 

residential masonry heater that does not meet the proposed emission limit of 0.32 lb of PM per 

MMBtu heat output. We are also proposing a 5-year small volume manufacturer compliance 

extension that would apply to companies that construct fewer than 15 masonry heaters per year.

See section V.C. of the preamble for more discussion of compliance date related issues. We 

request specific comments on the degree to which these dates can be sooner. As in the case of the 

other proposed standards, we are proposing requirements that would apply to the operator of the 

masonry heater, including a provision to operate the unit in compliance with the owner’s manual; 

a prohibition on use of certain fuels; and a requirement to use licensed wood pellets or 

equivalent, if applicable. We are not proposing efficiency standards for new residential masonry

heaters at this time because data are not yet available to support the basis for such standards. As 

in the case of the other proposed standards, this masonry heaters proposal does not include any 

requirements for heaters that are fueled solely by gas or oil or coal or non-wood biomass. Also as 

in the case of the other proposed standards, this masonry heaters proposal does not include any

requirements associated with heaters already in use.

The EPA is proposing to rely on ASTM test method E2817-11. The laboratories, some 

states, and many in the masonry heater industry worked for years on drafts of this method that 

has its roots in earlier regulatory efforts in Colorado. The EPA has participated in the discussions 

from time to time over the years and has provided comments and suggestions. There have been a 

number of variations of similar methods over the years. The current ASTM drafts are ASTM 

E2817-11 “Standard Test Method for Test Fueling Masonry Heaters” and ASTM WK26558 

“Specification for Calculation Method for Custom Designed, Site-built Masonry Heaters.” ( see

http://www.astm.org/DATABASE.CART/WORKITEMS/WK26558.htm for method). We are 

encouraged by the progress shown by development of these current draft ASTM methods and 

propose that they be used for this rulemaking. We request specific comments on these draft 

methods and any changes that should be considered and supporting data for those changes. We 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

2-17

request specific comments and supporting emission test data on the use of “Annex A1. 

Cordwood Fuel” and “Annex A2. Cribwood Fueling.” ASTM is allowing public review, for no 

charge, of the ASTM test methods and draft work products relevant to this rule at 

www.astm.org/epa.

As an alternative to testing, we are proposing that manufacturers of masonry heaters 

submit a computer model simulation program, such as ASTM WK 26558 noted above for the 

EPA’s review and approval. 

The structure of the rest of the proposed subpart RRRR is similar to the proposed subpart 

AAA certification and quality assurance process and contains similar requirements for labels, 

owner’s manual, etc. One difference, however, is that, for small custom unit manufacturers, we 

are requiring less stringent QA procedures. Specifically, we are proposing that the initial 

certification for these custom units is sufficient and that no further QA regulatory requirements 

are necessary because each unit is a unique model and subject to certification. We request 

comment on changes or improvements that might be needed to address special concerns related 

to certification of masonry heaters.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-1

SECTION 3

INDUSTRY PROFILE

The proposed revisions to the NSPS for residential wood heaters would cover a number 

of devices that include wood stoves/heaters, pellet stoves/heaters, ; masonry heaters; indoor and 

outdoor hydronic heaters and forced-air furnaces. (This RIA and the proposal use the terms 

stove, heater, and stove/heater interchangeably.) EPA has developed this industry profile to 

provide the reader with a general understanding of the technical and economic aspects of the 

industries that would be directly affected by potential revisions to the NSPS regulation for new 

residential wood heaters and to offer information relevant to preparing an economic impact 

analysis (EIA) for this proposed revision to the NSPS. We begin by outlining the supply side by 

discussing the production process for wood heaters and the associated costs and follow this with 

an overview of the demand side of the market for residential wood heaters as a primary or 

secondary home heating system. We then address the characteristics that define the residential 

wood heating market and profile the companies that produce wood heating systems. Although 

the wood heating equipment industry includes multiple product markets, there is little published 

information about the intricacies of each individual market. For this profile, we analyzed the 

wood heating market primarily on an aggregated level and provide detailed information for 

specific product markets when such information is available.

3.1 Supply Side

Wood heating devices embody a variety of products that provide heat for residential 

consumers by burning wood or other solid biomass fuel. Indoor wood-burning devices can 

provide space heating for a single room or can be central heaters for a residential home. Indoor 

heating devices include freestanding wood stoves, pellet stoves, masonry heaters, fireplace 

inserts, and forced-air furnaces. Outdoor wood heating devices, also known as outdoor wood 

boilers, or water stoves, are typically located adjacent to the home they heat in small sheds with 

short smoke stacks. Other products considered in the development of potential proposed 

revisions of this NSPS (but not proposed to be regulated in this rulemaking) include low-mass 

fireplaces, open masonry fireplaces, fireplaces, fire pits, chimineas, cook stoves, and pizza 

ovens.

This section provides a general description of the residential wood heater manufacturing 

processes. We then provide more detailed definitions of the indoor and outdoor wood heater 

products considered and the wood fuels used in their operation.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-2

3.1.1 Production Process

The manufacturing process for residential wood heaters varies depending on the product 

type being produced. Generally, the manufacturing process entails the assembly of several 

prefabricated metal components. Major inputs include cast iron, metal products, heat-proof glass, 

fireproof fabric insulation, refractory brick, and heat-tolerant enamels or coatings.

Wood heating devices are typically categorized by emissions and efficiency ratings. The

emissions ratings typically use EPA, ASTM, CSA, or EN (European Union) test methods. The 

efficiency ratings are based on tests that measure the amount of heating value transferred from a 

full load of wood or other biomass fuel (fuel type varies based on the product being tested) to the 

living space. Efficiency tests evaluate two performance metrics that include combustion and heat 

transfer efficiency. Combustion efficiency determines how effective the fire box design is at 

burning the fuel and extracting its heating value. Heat transfer efficiency tests are potentially 

conducted in calorimeter rooms equipped with temperature sensors to measure the degree 

changes in the heated living space and the flue exhaust to determine how much heat from the fire 

is delivered to the living space compared with the heat lost up the flue (EPA, 2009c).

Thermal output, typically expressed in British thermal units per hour (BTU/hr) in the 

United States, is the heat output measure that tells the amount of heat produced each hour. A 

higher BTU/hr rate suggests that a stove will produce more heat per hour than a stove with a 

lower rating. Depending on design and size characteristics, a space heating device heat output 

rating ranges between 8,000 and 90,000 BTU/hr. Larger heating systems designed to provide 

whole home heating have heat output ratings that range from 100,000 to greater than one million 

BTU/hr.

3.1.2 Product Types

3.1.2.1 Wood and Coal Stoves

EPA-certified wood stoves typically are enclosed combustion devices that provide direct 

space heating for a specific room or area of a home.8 Catalytic and noncatalytic wood stoves are 

two general types of wood stoves available in the United States. (Some models are hybrids.) This 

designation refers to the design of the combustion system. Noncatalytic combustion systems rely 

on high temperatures (>1,000°F) within the fire box to fully combust the chemical compounds 

(combustible gases and particles) in the wood smoke. In catalytic combustion systems, the 

 

8 EPA-certified wood stoves are those wood stoves that meet the requirements under the current residential wood 

heater NSPS.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-3

presence of the catalytic element lowers the temperature at which wood smoke chemical 

compounds combust. Catalytic elements or combustion system designs in noncatalytic 

combustion systems are used in existing stoves to meet EPA emission standards.

Coal stoves are similar in structure and appearance to wood stoves. Most coal stoves are 

designed to burn hard anthracite coal instead of soft bituminous coal (Houck, 2009), but different 

varieties of coal have been used in coal stoves over time. Stoves that solely burn coal are not 

affected by the proposed revisions to the NSPS.

3.1.2.2 Wood Pellet Stoves and Biomass Stoves

Wood pellet and other biomass stoves are similar in application to wood stoves but 

generate heat through pellet combustion. Wood pellet stoves use tightly compacted pellets of 

wood as fuel, whereas other biomass stoves can use a variety of pellet types, including corn, fruit 

pits, and cotton seed (EPA, 2009c). A load of pellets is poured into the stove’s hopper; then the 

user sets a thermostat that controls a feed device within the stove. The feed device regulates the 

amount of fuel that is released from the hopper into the heating chamber, which is where the 

combustion takes place (EPA, 2009c). Pellet stoves are typically more efficient in terms of 

combustion and heating than standard wood stoves but require electricity to operate the fans, 

controls, and pellet feeders (EPA, 2009c). Stoves that solely burn non-wood biomass are not 

affected by the proposed revisions to the NSPS.

3.1.2.3 Masonry Heaters

A masonry heater is a solid-fueled heating device that is pre-manufactured or constructed 

on site using mainly masonry or ceramic materials (Masonry Heater Association of North 

America, 1998). Though masonry heaters and traditional fireplaces are similar in appearance, 

masonry heaters are used primarily to generate heat, whereas fireplaces typically serve a more 

aesthetic purpose. The heater itself is made up of an interior construction unit consisting of a 

firebox and a set of heat exchange channels (Chernov, 2008). The hot gas produced during rapid 

combustion of fuel within the firebox passes through the heat exchange channels, which run 

throughout the structure and saturate the masonry mass with heat (Chernov, 2008). Most 

masonry heaters weigh over 800 kg. After the masonry walls are saturated, the masonry heater 

radiates the heat into the area for 12 to 15 hours (Chernov, 2008). Masonry heaters can heat a 

home all day without having to burn continuously and are often used in areas where other fuel 

sources are unavailable (Chernov, 2008). However, there is a significant lag time between the 

initial burn and the time that the masonry structure releases sufficient heat to warm a living space 

(U.S. Department of Energy [DOE], 2010).
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-4

3.1.2.4 Fireplace Inserts

A fireplace insert is a type of heater/stove that is designed to fit inside the firebox of an 

existing wood-burning fireplace (Wood Heat Organization, 2010). EPA-certified fireplace inserts 

are essentially wood heaters/stoves without legs or pedestals. An insert is made of steel or cast 

iron and is typically installed in masonry fireplaces or traditional fireplaces in order to provide 

effective heating (Hearth, Patio, and Barbeque Association [HPBA], 2010b). As an insulated 

closed-door system, a fireplace insert improves combustion by slowing down the fire, decreasing 

the excess air, and increasing the fire’s temperature (HPBA, 2010b). In addition to wood-fueled

fireplace inserts, other inserts can be fueled with natural gas, propane, pellets, or coal (HPBA, 

2010b).

3.1.2.5 Forced Air Furnaces

A forced-air furnace is a type of central heating system that typically burns cordwood or 

pellets. A forced-air furnace is typically located inside a house and provides controlled heat 

throughout a home using a network of air ducts (EPA, 2009c). This is a primary heating system 

that requires electricity to operate and is much more common currently in the U.S. compared to 

hydronic heaters. 

3.1.2.6 Outdoor Wood Heaters

An outdoor wood heater, also often called a wood-fired boiler, is a type of hydronic 

heater that is designed to be the home’s primary heating system. Wood boilers are typically

located outdoors and have the appearance of a small shed with a smokestack (EPA, 2009c). 

Hydronic heaters burn wood to heat a working liquid contained in a closed-loop system. The 

heated liquid is then circulated to the house to provide heat and hot water (EPA, 2009). Hydronic 

heaters are typically sold in areas with cold climates where wood may be the most readily 

available fuel source (EPA, 2009c). In addition to outdoor hydronic heaters, there is an emerging 

market for indoor hydronic heaters. Currently, the indoor hydronic heater market is 

approximately 10% of the hydronic heater market. 

3.1.2.7 Indoor and Outdoor Fireplaces

Fireplaces are typically not effective heating sources and are typically considered more of 

an aesthetic feature than a functional device. The common low-mass fireplace is pre-fabricated 

of steel in a factory and shipped to the home builder. A low-mass fireplace and its attached 

chimney are light enough to be weighed on a platform scale (EPA, 2009c). Although low-mass 

fireplace installations in homes often surrounded by natural or synthetic facades of masonry–like 

materials, they should not be confused with masonry fireplaces or masonry heaters that are 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-5

primarily constructed if brick, stone, or other masonry materials. Masonry fireplaces are 

traditional, aesthetic fireplaces that do not have the extensive heat channels that define masonry

heaters (Fireplaces & Woodstoves, 2010).

Fireplaces are also often used to enhance the outdoor area of a house. A portable grated 

cylinder style has a bottom basin surrounded by open grating for a fire, a cooking grate, and a lid 

(EPA, 2009c). A permanent outdoor fireplace is similar to one that would be found indoors. 

They can be freestanding or attached to the outside of the house (EPA, 2009c).

Indoor and outdoor fireplaces are not covered by or affected by the proposed revisions to 

the NSPS.

3.1.2.8 Fire Pits, Chimineas, Cook Stoves, and Pizza Ovens

Several outdoor appliances involve using wood fuel for cooking or heating. A fire pit is a 

round outdoor hearth appliance that is designed to replicate the ambiance of a campfire by

radiating heat in 360 degrees around the pit (HPBA, 2010c). A chiminea is typically constructed 

out of cast iron, terra cotta, or clay and burns firewood inside the internal oven. As the fire burns, 

the walls of the oven absorb heat. After the dome chamber reaches the desired temperature, the 

fire can be allowed to die down (EPA, 2009c). Wood cook stoves are made of cast iron to 

withstand the high temperatures produced by the fire (EPA, 2009c). They are similar in 

appearance to a conventional stove, complete with an oven and cooking ranges, but are larger in 

order to accommodate the wood fuel (EPA, 2009c). North American traditional cook stoves have 

defined dimensions and cooking performance characteristics. Native American bake ovens have 

defined cultural and cooking functions. Pizza ovens are made out of a masonry material, such as 

clay adobe or refractory bricks, which can endure high temperatures for an extended period of 

time (EPA, 2009c).

These appliances are not covered or affected by the revisions to the NSPS.

3.1.3 Costs of Production

Because of the variety of products covered under the wood heat source category, different 

manufacturers use a wide range of materials and have varying labor requirements. Since there is 

significant diversity in output between the producers in this category, as well as the broader 

industries in which they may be classified for data purposes, this section highlights the 

production costs associated with several of the North American Industry Classification System 

(NAICS) codes under which a significant number of the wood heating equipment manufacturing 

facilities in our database are included.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-6

Table 3-1 displays costs for the heating equipment and hardware manufacturing 

industries. The production of devices like wood stoves, hydronic heaters, and fireplace inserts is

included under the heating equipment category (NAICS 333414). In 2011, the total cost of 

materials used for production represented roughly 47% of the industry’s total value of shipments, 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-7

Table 3-1. Costs for Labor and Materials for U.S. Heating Equipment and Hardware Manufacturing: 2011

NAICSBased 

Code

Meaning of 

NAICS-Based 

Code Year

Number of 

Employees

Annual 

Payroll 

($1,000)

Production 

Workers 

Average per 

Year

Total Cost 

of 

Materials 

($1,000)

Materials, 

Parts, 

Containers, 

Packaging, 

etc., Used 

($1,000)

Cost of 

Purchased 

Fuels 

($1,000)

Cost of 

Purchased 

Electricity 

($1,000)

Total 

Value of 

Shipments 

($1,000)

333414 Heating 

Equipment (except 

warm air furnace)

2011 15,925 803,254 9,497 1,968,956 1,639,894 10,840 41,594 4,153,470

332510 Hardware 

Manufacturing

2011 24,406 1,175,743 16,956 3,362,268 2,731,577 21,592 52,530 6,256,338

Source: U.S. Census Bureau. 2011a. American Fact Finder. Sector 31: Annual Survey of Manufactures: General Statistics: Statistics for Industry Groups and 

Industries: 2011 and 2010. http://factfinder.census.gov. Accessed on February 21, 2013.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-8

while labor costs (represented as annual payroll estimates) only represented 19%. The hardware 

manufacturing industry (NAICS 332510) had similar statistics: materials used and annual payroll 

accounted for 54% and 19% of the total value of shipments, respectively.

Masonry fireplace construction and other site-assembled fireplace construction are 

covered under the two industries displayed in Table 3-2. The new single-family construction 

general contractors industry (NAICS 236115) covers a broad spectrum of construction activities 

beyond masonry and fireplace construction. Like heating equipment and hardware 

manufacturing, this industry is highly capital intensive; 42% of the value of the construction 

work is attributed to the cost of materials. Labor accounts for only 12%. For the masonry

contractor industry, however, payroll costs represent over 30% of the value of construction work 

suggesting that masonry contracting requires a special skill set and a specific degree of 

craftsmanship.

The 2007 production costs for plumbing and heating equipment wholesalers (NAICS 

423720), which are the most recent available from the Census Bureau, are outlined in Table 3-3. 

This category, which includes the merchant wholesale production of cooking and heating stoves 

and hydronic heaters, made over $50 billion in sales in 2007. Table 3-4 displays the costs for 

certain home furnishing stores, including those that sell wood stoves at retail prices. The costs 

for these industries may be more indicative of the wholesale and retail exchanges of woodheating equipment rather than the actual production process.

3.2 Demand Side

The subject wood-fired heaters are sold explicitly for residential use. These devices can 

be included in the original construction of a new home or installed later in the life of the home. 

Demand for residential wood heating devices is driven by several key factors that include size, 

price, efficiency, aesthetics, and fuel type (e.g., cord wood, pellet wood, or other biomass fuels). 

However, consumer demand for any one product discussed in Section 3.1 is driven primarily by 

the intended end-use heating application. This section defines the three major consumer 

segments that drive demand based on the end-use application. Following this discussion, we 

present some national statistics on the variation in residential wood heat consumers in the United 

States. We conclude our discussion of the demand side by characterizing some of the substitutes 

for residential wood-burning devices.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-9

Table 3-2. Costs for U.S. Masonry Contractors and Single-Family Home Contractors: 2007

NAICS-Based 

Code

Meaning of NAICS-Based 

Code Year Number of Employees Total Payroll ($1,000)

Cost of Materials, 

Components, and 

Supplies ($1,000)

Total Value of 

Construction Work 

($1,000)

236115 New single-family general 

contractors

2007 259,905 10,834,064 37,676,878 89,282,708

238140 Masonry contractors 2007 232,315 8,250,581 8,594,565 26,984,381

Source: U.S. Census Bureau. 2010b. American Fact Finder. Sector 23: EC0723SG01: Construction: Summary Series: General Summary: Detailed Statistics for 

Establishments: 2007. Released May 18, 2010. http://factfinder.census.gov.

Table 3-3. Costs for U.S. Plumbing and Heating Equipment Supplies Wholesalers: 2007

NAICS-Based 

Code Meaning of NAICS-Based Code Year

Number of 

Employees

Annual Payroll 

($1,000)

Operating Expenses 

($1,000)

Sales

($1,000)

423720 Plumbing and heating equipment 

supplies (hydronics) merchant 

wholesalers

2007 87,907 4,542,337 8,311,462 50,316,133

Source: U.S. Census Bureau, 2010c. American Fact Finder. Sector 42: EC0742A1: Wholesale Trade: Geographic Area Series: Summary Statistics for the United 

States, States, Metro Areas, Counties, and Places: 2007. Released July 23, 2010. http://factfinder.census.gov.

Table 3-4. Costs for U.S. Specialized Home Furnishing Stores: 2007

NAICS-Based 

Code Meaning of NAICS-Based Code Year

Number of

Employees

Annual Payroll

($1,000)

Sales

($1,000)

442299 All other home furnishing stores 2007 19,057 3,427,682 27,326,976

Source: U.S. Census Bureau, 2010d. American Fact Finder. Sector 44: EC0744A1: Retail Trade: Geographic Area Series: Summary Statistics for the United 

States, States, Metro Areas, Counties, and Places: 2007. Released July 23, 2010. http://factfinder.census.gov.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-10

3.2.1 End-Use Consumer Segments

The intended end-use heating application is a primary driver of demand for residential 

heating devices. The U.S. Annual Housing Survey (HUD, 2008) provides a starting point for 

classifying the various types of residential consumer of heating equipment. For the purposes of 

this profile we grouped consumers into three major segments based on their desired heating 

needs: whole-house heating, secondary or zone heating, and recreational outdoor heating 

applications.

The primary, or whole-house heating segment, includes homes with no other central 

heating system that can provide heating service in or outside the house. In smaller homes, a large 

stove or masonry heater may be sufficient to provide heat to the entire house. However, larger 

homes typically require, either individually or in some combination thereof, an outdoor wood 

boiler, a hydronic heater, or a pellet-burning forced-air furnace, to meet the consumers’ heating 

needs.

The secondary, or zone heating segment, includes consumers that desire supplemental 

heat from a wood-burning device in homes with an existing central heating system that serves as 

the home’s primary heat source. Cordwood and wood pellet-burning stoves are ideal for heating 

a single room or zone within a home. Smaller masonry heaters are also well suited for zone 

heating needs.

Finally, a third component of demand is represented by consumers who desire a wood-burning 

device for recreational aesthetic applications. Outdoor fireplaces, chimineas, outdoor ovens, and 

pizza stoves are some examples of the wood-burning devices designed for recreational 

applications. The products that address the needs of this consumer segment are primarily

intended to enhance the aesthetics or landscape outside the home. Indoor fireplaces typically

serve aesthetic or recreational purposes rather than providing effective room heat. Only about 9% 

of wood fireplaces are used for heat generation (HPBA, 2010a).

3.2.2 Regional Variation in Residential Demand

In 2010, 2.1% of total occupied homes in the United States relied on wood heat as the 

primary fuel source for home heating. The demand for wood heat is concentrated in the 

Northeast, the Northwest, and the northern Midwest regions of the United States. Table 3-5 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-11

Table 3-5. Wood as Primary Fuel Source for Home Heating in the United States: 2006–

2008

State

Percentage of State OwnerOccupied HousesPercentage of National 

Owner-Occupied Houses Count

California 2% 9% 165,440

New York 3% 6% 103,740

Pennsylvania 3% 6% 100,355

Washington 6% 5% 92,664

Michigan 3% 5% 85,712

Wisconsin 5% 5% 83,040

Oregon 8% 4% 79,637

Ohio 2% 4% 67,665

Virginia 3% 3% 60,579

North Carolina 2% 3% 58,397

Minnesota 3% 2% 43,234

Maine 10% 2% 41,509

Indiana 2% 2% 38,550

West Virginia 7% 2% 38,142

Idaho 8% 2% 32,817

Colorado 2% 2% 28,668

Vermont 15% 1% 26,601

Massachusetts 2% 1% 25,870

Montana 9% 1% 24,355

New Hampshire 7% 1% 24,071

Top 20 total 68% 1,221,046

National total 100% 1,792,741

Source: U.S. Census Bureau. 2009. American Community Survey: 2006–2008. Available at: 

http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS&_submenuId=&_lang=en&_

ts=.

illustrates this regional concentration by listing the 20 states that represent the highest percentage 

of households that use wood heat based on Census data from 2006–2008. The second column 

shows the number of wood-heat users as a percentage of the total homes in the state, while the 

third column shows the number of wood-heated homes as a percentage of the total users in the 

United States. These 20 states account for over two-thirds of the total primary U.S. residential 

wood heat demand.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-12

About 10–12% of American households use wood when secondary wood heat demand is 

counted, according to the Census and the Energy Information Administration (EIA). Table 3-6 

illustrates the regional breakdown of secondary wood heat demand by U.S. Census divisions in 

2009, which is the most recent year for which these data are available. Roughly 8% of the 

American households use wood as a secondary heat source.

Table 3-6. Wood as Secondary Heat Source by Census Division, 2009 (millions of 

households)

Census Division Number of Households

Percentage of U.S. 

Households using 

Wood as Secondary 

Heat Source 

Percentage of Total 

U.S. Households

South Atlantic 1.6 18% 1%

Pacific 1.7 19% 1%

East North Central 1.2 14% 1%

West North Central 0.8 9% 1%

West South Central 0.7 8% 1%

Mountain 0.8 9% 1%

Middle Atlantic 1.0 11% 1%

East South Central 0.4 4% 1%

New England 0.7 8% 0%

Grand total 8.8 100% 8%

Total U.S. households 113.6

Source: U.S. Energy Information Administration, 2011. Residential Energy Consumption Survey: 2009. Available 

at http://www.eia.gov/consumption/residential/data/2009/#undefined. 

Figure 3-1 shows which states fall into which Census divisions. More households rely on 

wood fuel as a supplemental heat source rather than as a primary source. Roughly 12% of 

American households used wood fuel for a secondary heat source in 2009, whereas 3% of 

households relied on wood for their primary heat source in the same year. The proportion of the 

population using primary wood heat was relatively consistent between 2005 data presented in 

Table 3-6 and the 2006 to 2008 period, as shown in Table 3-5.4 One interesting note about 

 

4 Although the total occupied households between the Department of Energy’s Residential Energy Consumption 

Survey [RECS] and the Census Bureau’s American Community Survey [ACS] differ, the proportion of total 

occupied households using wood fuel as their primary home heating fuel is consistent. The survey data sources 

used in Table 3-6 assumes 111 million occupied homes in 2009 while Figure 2-2 assumes 109 million for the 

same year. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-13

Figure 3-1. Census Regions and Divisions of the United States

Source: U.S. Census Bureau, 2010e. Census Regions and Divisions of the United States. Available at 

http://www.census.gov/geo/www/us_regdiv.pdf.

secondary wood fuel use is that it does not appear prevalent in the Middle Atlantic or New 

England states, which account for only 19% of the total secondary use. This fact is in contrast to 

the primary use data in Table 3-5, which shows households in Vermont, New Hampshire, Maine, 

Pennsylvania, Massachusetts, and New York accounting for 17% of the total national primary

demand.

Within the wood heat demand constituency, there is also regional demand variation for 

different wood-fueled appliances. For example, the demand for wood-fired forced-air furnaces is 

concentrated primarily in the Great Lakes region of the country and, to a lesser extent, the 

Midwest (HPBA, 2010a). These two regions account for 82% of the 30,000 to 35,000 furnaces 

sold annually in the United States (HPBA, 2010a). Demand for wood-fueled cook stoves is 

concentrated in the Amish and Mennonite communities in the Midwest (HPBA, 2010a).

3.2.3 National Home Heating Trends

Residential demand for wood fuel has been declining steadily throughout the United 

States over a fairly long period of time. Figure 3-2 illustrates the number of households from 

1989 to 2005 that reported using wood fuel for heating, cooking, or heating water. In 1989, 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-14

Figure 3-2. Declining Trend in U.S. Housing Units Using Wood Fuel: 1989–2005

Source: U.S. Housing and Urban Development [HUD]. 2008. American Housing Survey for the United States. 

Multiple Years. Table 3-5. Available at http://www.census.gov/hhes/www/housing/ahs/nationaldata.html. 

roughly 15% of all occupied housing units used wood fuel. The proportion of wood-fuel users 

has declined relatively steadily throughout the past 20 years. By 2005, fewer than 9% of the total 

109 million occupied households in the United States used wood fuel for heating, cooking, or 

heating water.

The indoor fireplace market illustrates the continuing decline in wood fuel use over the 

past decade (HPBA, 2010a). As discussed in the next section, consumers are trending toward gas 

fireplaces instead of wood-fueled fireplaces. Fireplace manufacturers report that shipments of 

wood-fired factory-built fireplaces have been declining over the past decade as a result of the 

weakening new home construction market and the shift in consumer preferences toward gas

fireplaces in the new homes that are being built (HPBA, 2010a). Of new home fireplaces, only 

35% burn wood, whereas 65% are fueled by gas (HPBA, 2010a). It should be noted, however, 

that this trend has been arrested to some degree in recent times as the cost of wood fuel for 

heater/stove/furnace heating has come in line with the cost of oil and gas stove/heater/furnace 

heating, and trends show an increase in wood heating in households as shown in the unit cost 

memo prepared for this proposed rule.

9

 

9 U.S. EPA. Memorandum. Unit Cost Estimates of Residential Wood Heating Appliances. February 21, 2013. 

Prepared by EC/R, Inc. 

0%

2%

4%

6%

8%

10%

12%

14%

16%

1989 1991 1993 1995 1997 1999 2001 2003 2005

%

of T

otal Occupied H

ousing Units

Year
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-15

3.2.4 Substitution Possibilities

The availability of close substitutes for wood heating equipment is largely contingent on 

two key factors: (1) the consumer’s heating needs and preferences and (2) the price and 

availability of an alternative heating source. As discussed in Section 3.2.1, consumers tend to fall 

into one of three demand segments depending on their desired end use for their heating device. 

Each consumer group displays varying degrees of substitutability. The relative price of 

alternatives is also an important aspect of product substitution, which includes the cost of the 

heating equipment itself and the price and availability of the fuel it requires.

For most consumers looking for whole-house heat or single-room heat, gas or electric 

heat provides a common substitute for wood fuel. Electricity can power central heating systems 

for whole-house heat and smaller space heaters for single rooms. Since the majority of American 

households have easy access to electric power, these home heating options are often a convenient 

and low-cost alternative to wood heat. Gas-powered central furnaces and room heaters and oilpowered central heating systems are also on the market for residential use (DOE, 2009). 

Although most consumers have homes equipped for gas or electric power, more rural areas of the 

country have limited access to reliable utilities. In these regions, electric or gas heat may not be 

an available or cost-efficient choice relative to wood heat.

Recreational or aesthetic wood-fired appliances have fewer direct substitutes. Traditional 

indoor fireplaces and masonry fireplaces can be outfitted for burning natural gas rather than 

wood. Consumers may have a personal preference for one over the other. Wood fuel can be

messy and somewhat difficult to store, whereas natural gas can be more convenient and easier to 

use, and gas furnaces can be much more efficient. Outdoor recreational appliances may be 

difficult to substitute directly because many consumers desire the aesthetic effect created by a 

wood-burning fire pit or chiminea. Outdoor charcoal or gas grills provide an alternative for 

outdoor wood-fired cooking appliances, but consumers may not consider these a direct 

substitute. It should be noted that outdoor recreational wood-burning appliances such as fire pits, 

chiminea, and grills are not covered in this proposal. 

3.2.5 Price Elasticity of Demand

Price elasticity of demand is a concept in economic theory. It is a numeric measure of the 

sensitivity of demand following an increase or decrease in the product’s price. The level of 

sensitivity is determined by a number of factors that include the availability and price of 

substitutes (e.g., other types of heating equipment, gas or electric space heaters and furnaces) and 

the price of complements (wood fuels).
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-16

In preparing this profile, we searched for, but were unable to identify, any empirical 

estimates of the price elasticity of demand for residential wood heating equipment in recent 

times. An estimate of −1.6 was derived for use in the RIA for the current Residential Wood 

Combustion NSPS (EPA, 1986). Although numerous articles estimate the elasticity of demand 

for residential energy and heating fuels, these estimates focus almost exclusively on electricity,

natural gas, and fuel oil. These estimates find that residential energy and heating fuel demand is 

relatively inelastic (i.e., there are only very small changes in demand in response to an increase 

in energy or fuel prices). A recent RAND report suggests that in the short term, demand for 

electricity and natural gas in residential markets is relatively inelastic (Bernstein and Griffin, 

2005). However, the authors of the report also note that sustained higher energy prices in the 

long term may result in demand for energy becoming more elastic as consumers have time to 

identify more energy-efficient options.

In the absence of empirical estimates, we offer a qualitative discussion of the key

determinants of the price elasticity of demand to provide a general sense of whether consumer 

demand is elastic or inelastic. As mentioned earlier, the determinants of elasticity include the 

degree of substitutability, product necessity, and duration of the price increase.

There are a number of close substitutes for residential wood heating devices that include 

electric and gas furnaces and space heaters. The extent to which consumers are able to substitute 

between these options is likely to vary depending on geographic location. Overall, the presence 

of good substitutes will increase the elasticity of demand for wood heating equipment. In 

contrast, sustained higher prices for heating fuel (i.e., electricity, natural gas, and fuel oil) may

make switching away from wood heating equipment less likely and, ultimately, make demand 

for wood heating equipment more inelastic. Also, the elasticity may depend on whether the fuel 

in question is a secondary source of fuel instead of a primary fuel source. 

Finally, the magnitude of the cost for residential wood heating equipment may also 

increase the elasticity of demand. Consumer demand tends to be more elastic when the price of 

the good represents a large proportion of consumer income (Bernstein and Griffin, 2005). In 

other words, consumers become more sensitive to small price changes when considering the 

purchase of a large household appliance (e.g., refrigerator, oven range, or heating system).

3.3 Industry Organization

A review and description of market characteristics (i.e., geography, product 

differentiation, product transportation, entry barriers, and degree of concentration) can enhance 

our understanding of the mechanisms underlying the wood heating equipment industry. These 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-17

characteristics provide indicators of a firm’s ability to influence market prices by varying the 

quantity of product it sells. For example, in markets with large numbers of sellers and identical 

products, firms are unlikely to be able to influence market prices via their production decisions 

(i.e., they are “price takers” and operate in highly competitive markets). However, in markets 

with few firms, significant barriers to entry (e.g., licenses, legal restrictions, or high fixed costs), 

or products that are similar but can be differentiated, a firm may have some degree of market 

power (i.e., to set or significantly influence market prices). In addition, if a product is difficult to 

transport over long distance (due to weight or hazardous nature), then the market size may be 

more restricted than one might expect, all other things being equal.

3.3.1 Market Structure

Market structure characterizes the level of competition and determines the extent to 

which producers and sellers can influence market prices. Economic market structure typically 

focuses on the number of producers and consumers, the barriers to market entry, and product 

substitutability.

The residential wood heater market contains a number of large producers selling a 

number of differentiated products along with a large number of small producers. These 

characteristics suggest a quasi-monopolistic competitive market (i.e., somewhere between highly 

competitive and less competitive) for large producers who will have some influence over market 

prices. For small producers, the market will be highly competitive in nature. In addition, existing 

regulatory requirements for product testing and certifications represent a barrier to market entry

for new producers of wood heating devices. Competition in this market may be further 

constrained by transportation costs due to the weight of these products. A similar assessment was 

determined in the 1986 study by the American Enterprise Institute (AEI) and Brookings 

Institution Joint Center for Regulatory Studies.

The AEI-Brookings report also identified several key factors that influence 

manufacturers’ pricing decisions. These factors included production prices, prices of similar 

products sold by competitors, transportation costs, combustion technology and efficiency, and 

consumers’ ability to differentiate products based on brand name and efficiency.

Price elasticity of supply is a numeric measure of the industry’s response to a small 

percentage increase in the product price (Landsburg, 2005). The law of supply suggests 

producers supply greater quantities at higher prices as a result of increasing marginal returns for 

each additional unit produced as the average cost per unit of output declines. As a result, the 

elasticity of supply for most industries is positive. Determinants of supply elasticity are 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-18

flexibility of sellers to adjust production and the time period being considered in estimating the 

elasticity. Most manufactured goods have an elastic supply, meaning that sellers can adjust 

production quickly in response to a change in prices (Mankiw, 1998). Industries with excess 

plant capacity are likely to have elastic supply as sellers can ramp up production in a relatively 

short time frame.

Based on 2006 plant capacity utilization data as shown in Figure 3-3, the heating 

equipment manufacturing industry averaged 60% utilization, growing from 59% in 2002 to a 

maximum utilization of 65% in 2005 and then falling to 54% in 2006 (U.S. Census Bureau, 

2007). Similar statistics are not available for more recent years because this survey was

discontinued after 2006. The available data suggest that there is ample existing capacity to 

increase production in the short and long terms, assuming an increase in price of residential 

wood-burning heating equipment.

Figure 3-3. Annual Plant Capacity Utilization for Heating Equipment Manufacturers 

(NAICS 333414): 2002–2006

Source: U.S. Census Bureau. 2007. Survey of Plant Capacity: 2006. “Table 1a. Full Capacity Utilization Rates by 

Industry Fourth Quarter 2002–2006.” Census Bureau, Washington DC. Report No. MQ-C1(06).

3.3.2 Manufacturing Plants

Since 1988, the change in the number of residential wood-fired heater producers is 

unclear. The U.S. Economic Census reports that between 1992 and 2007 the number of 

establishments (places of business) in the industry has remained unchanged. Alternatively, the 

59% 59%

62%

65%

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006

PlantCapacity Utilization

Year
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-19

industry association (HPBA) has suggested that the number of manufacturers of wood-fired 

heaters fell by 80% following the 1988 NSPS, down from approximately 500 to roughly 120 

manufacturers today (Houck and Tiegs, 2009). The difference between the 2 estimates is thought 

to be due to the large number of “backyard welders” in 1988 who built handmade stoves in their 

backyard as a sideline rather than their main source of income and chose not to attempt to 

develop competitive designs for the marketplace after the 1988 NSPS was promulgated. 

For this analysis, we were able to identify 635 firms in the residential wood heating 

equipment industry in the United States. RTI developed this estimate leveraging a number of 

different sources that included EPA’s official list of certified wood heater manufacturers, Dun & 

Bradstreet’s online company database, and a number of industry association membership lists. 

The estimate includes the manufacturers listed on EPA’s official certification lists (~120 

manufacturers). We then expanded this list to include manufacturers of masonry heaters and 

outdoor wood boilers and manufacturers of non-heating devices, such as cook stoves, outdoor 

fireplaces, and bake ovens. Table 3-7 reports the count of U.S.-based companies in the industry

by major business type.

Table 3-7. Number of U.S. Companies by Business Type

Business Type Number of Companies

Reported Sales 2008 

($1,000s)

U.S. Market Share 

(% of Net Sales)

Manufacturers 577 $1,285,800 96.60%

Masonry contractors 24 $7,200 0.54%

Wholesalers, distributors 19 $34,200 2.57%

Residential construction 10 $3,200 0.24%

Retailers 5 $600 0.05%

U.S. Totals 635 $1,331,000 100%

Sources: Dun & Bradstreet Marketplace, a company database. RTI International calculations. 

Residential wood heater manufacturers account for over 90% of the firms in the industry

and span 14 different NAICS codes, of which 560 are categorized as NAICS 333414, as 

establishments primarily engaged in manufacturing heating equipment (except electric and warm 

air furnaces), such as heating boilers, heating stoves, floor and wall furnaces, and wall and 

baseboard heating units (Census Bureau, 2010f). An average manufacturer may produce 

anywhere from one to five technically different products (HPBA, 2010a). Manufacturers 

dominate the market, accounting for over 96% of sales for the industry in 2008.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-20

Masonry contractors are the second largest group of businesses, accounting for 5% of the 

companies, and almost all masonry contractors are classified as NAICS 238140 establishments 

primarily engaged in masonry work, stone setting, brick laying, and other stone work for new 

construction, additions, alterations, maintenance, and repairs (U.S. Census Bureau, 2010f). 

Masonry contractors account for less than 1% of the industry sales. The remaining 5% of 

businesses are classified as residential construction contractors, wholesalers, distributors, and 

retailers. Residential construction contractors are primarily associated with design construction 

and installation of masonry heaters, outdoor fireplaces, and hydronic heaters. Companies 

classified as wholesalers, distributors, and retailers do not manufacture products but may be tied 

exclusively to a single brand or manufacturer, while others distribute and sell multiple products 

and brands.

3.3.3 Location

The industry is, for the most part, co-located in areas of the country with the largest 

demand for winter heating. Over 50% of U.S.-owned companies are located in 10 states in the 

northern half of the country. The largest number of companies is located in California, with 

additional concentrations in the Northwest, Northeast, the upper Midwest, and Central Plains. 

Table 3-8 reports the number of U.S. companies for the top 10 states. Additionally, 

approximately 104 foreign-based companies operate in the United States, two-thirds of which are 

Canadian-based companies.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-21

Table 3-8. U.S. Wood Heat Equipment Industry by Geographic Location

Location Business Count % of Total U.S. Industry

California 63 10%

Pennsylvania 36 6%

Minnesota 35 6%

New York 33 5%

Washington 31 5%

Ohio 29 5%

Texas 29 5%

Wisconsin 26 4%

Michigan 25 4%

Illinois 21 3%

U.S. Total 635 86%

Canada 67 9%

Other foreign 37 5%

Industry Total 739 100%

Sources: Dun & Bradstreet Marketplace, a company database. RTI International calculations.

3.3.4 Company Sales and Employment

Overall sales for the residential wood heating industry totaled more than $1.3 billion in 

2008. Based on company data obtained for this profile, the industry employs approximately 

17,000 workers annually. Previous analysis suggests that the industry relies on seasonal labor, 

ramping up production in months leading up to winter and reducing employment and production 

during the warmer parts of the year (AEI, 1986). Table 3-9 presents median sales and 

employment for the industry by business type.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-22

Table 3-9. U.S. Sales and Employment Statistics by Business Type

Business Type Number of Companies

Median Sales 2010

($1,000s)

Median Employment 

per Company

Manufacturers 577 $204 4

Masonry contractors 24 $102 3

Wholesalers, distributors 19 $510 5

Residential construction 10 $102 2

Retailers 5 $102 2

U.S. Totals 635 $204 4

Sources: Dun & Bradstreet Marketplace, a company database. RTI International calculations. Median sales estimates 

are escalated to 2010 from 2008 using the GDP implicit price deflator. The resulting escalation ratio for 

these years is 1.022.

Firms manufacturing heating equipment (except electric and warm air furnaces), such as 

heating boilers, heating stoves, floor and wall furnaces, and wall and baseboard heating units 

(NAICS 333414), are classified as small by the Small Business Administration (SBA, 2013) if 

they have fewer than 500 employees. Looking across the 14 manufacturing-related NAICS codes 

in our analysis, we find that approximately 90% of manufacturers are considered small 

businesses based on their reported employment compared with the SBA threshold. SBA 

classifies wholesalers and distributors as small if their employment is fewer than 100 workers. 

Approximately 68% of the industry’s wholesalers and distributors are considered small based on 

the employment data obtained for this analysis.

SBA thresholds for masonry, construction, and retail firms are based on annual sales. 

SBA standards for NAICS codes under these business types range between $14 and $33 million 

in annual revenue. As reported in Table 3-9, median sales in these business categories are far 

below the range of SBA standards. As one would expect, our analysis finds that all 39 firms are 

considered small based on their reported annual sales compared with the SBA standards for their 

respective NAICS code classifications.

3.3.4.1 Profits of Affected Entities

Table 3-10 reports profit margins for manufacturers, masonry contractors, and 

wholesalers and distributors. The profit margin represents an average of reported profit per unit 

sales across the industry classified by the 6-digit NAICS code.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-23

Table 3-10. Profit Margins for NAICS 333414, 238140, and 423720: 2008

NAICS 

Code NAICS Description

Profit 

Margin

Industry 

Sales 

($106)

333414 Heating Equipment Manufacturers 4.3% $70,965

238140 Masonry Contractors 4.7% $9,676

423720 Plumbing and Heating Equipment Supplies (Hydronics) Merchant Wholesalers 3.4% $58,907

Source: The Risk Management Association. 2008. Annual Statement Studies, Financial Ratio Benchmarks 2008–

2009. Risk Management Association, Philadelphia: 2008.

3.4 Residential Wood Heater Market

Residential wood heating device shipments in the United States were relatively consistent 

from year to year between 1998 and 2005, according to the HPBA’s reported hearth industry

shipment data (2009). Since 2005, total industry shipments on average have declined annually by 

24%. Industry experts attribute this decline in large part to the broader economic downturn and 

poor housing market. Renewable energy tax rebates offered in 2008 provided some relief for 

pellet-fueled devices, resulting in a 1-year increase in shipments of 161%, only to steeply decline 

again in 2009. This reflects the impact that the renewable energy tax rebates can have on wood 

burning appliances depending on the size and duration of the rebates. Table 3-11 presents 

shipment volumes by product type in 2008.

Outdoor wood boilers (or hydronic heaters) are a relatively new product in the market 

since 1990. Previous studies have reported annual growth in sales of between 30 and 128%, with 

over 155,000 outdoor wood boilers in use in the United States in 2006 (NESCAUM, 2006). Sales 

have been regionally focused in the Northeast (especially the Great Lakes region) and 

Midwestern states. The NESCAUM report predicted that over 500,000 outdoor wood boilers will 

be in use before the end of 2010 if trends in annual sales continue to follow growth rates 

observed between 1990 and 2006.

Market data for coal-burning stoves are very limited. However, anecdotal evidence 

suggests that coal stove use is limited to major coal states, including Pennsylvania, West 

Virginia, and Indiana, where coal is abundant and cheap relative to other heating fuels (Dagan,
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-24

Table 3-11. Unit Shipments and Percentage of Total Units by Product Type: 2008

Product Type Units % of Total Units

Wood stove 166,527 33%

Pellet stove 130,381 26%

Biomass stove 6,819 1%

Wood fireplacesa180,966 36%

Outdoor fireplaces 6,302 1%

Masonry heaters 730 0%

Hydronic central heating systems 13,385 3%

Total 505,110 100%

a Wood fireplaces in this table include both factory-built and site-built models.

Source: Frost & Sullivan. 2010. Market Research Report on North American Residential Wood Heaters, 

Fireplaces, and Hearth Heating Products Markets. Prepared for EC/R Inc.

2005). Most of the major stove manufacturers feature at least one coal-burning stove model. 

However, at the time of writing this profile, we were unable to locate any reliable estimate of 

shipments in the United States for coal stoves.

3.4.1 Market Prices

Residential wood combustions device prices range from $200 to $50,000 depending on 

the product type and characteristics. Consumers who purchase these products must also consider 

the costs of installation, which range between $300 and $6,000 on average. Tables 3-12 and 3-13 

report the average cost of installation and purchase price for residential wood combustion 

devices.

Table 3-12. Installation Costs for Average System by Product Type (North America): 2008 

Product Type Installation Cost

Wood stove $500 

Pellet stove $300 

Biomass stove $300 

Wood fireplaces $600 

Outdoor fireplaces $350 

Masonry heaters $6,000 

Hydronic central heating systems $2,000 

Source: Frost & Sullivan. 2010. Market Research Report on North American Residential Wood Heaters, 

Fireplaces, and Hearth Heating Products Markets. Prepared for EC/R Inc.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-25

Table 3-13. Manufacturers’ Price by Product Type (North America): 2008 

Product Type Average Price Price Range

Wood stove $848 $200 to $2,800

Pellet stove $1,279 $300 to $3,500

Biomass stove $1,403 $350 to $4,000

Wood fireplaces $450 $150 to $5,000

Outdoor fireplaces $755 $250 to $6,000

Masonry heaters $9,041 $4,000 to $15,000

Hydronic central heating systems $7,433 $5,000 to $35,000

Source: Frost & Sullivan. 2010. Market Research Report on North American Residential Wood Heaters, 

Fireplaces, and Hearth Heating Products Markets, Figure 2.6. Prepared for Ec/R Inc.

Given the specialized skills and materials required to construct a masonry heater, it is not 

surprising that this product has the highest average market price. Hydronic heaters are the second 

most expensive product partly because of the additional material requirements. The price of 

freestanding stoves and fireplace inserts varies depending on the fuel it burns. Biomass stoves 

are almost twice as expensive as cord wood-burning stoves because biomass stoves are more 

similar in construction to pellet stoves. Although no price data exist on coal-burning stoves, costs 

are comparable to traditional cord wood stoves. Coal stove prices for 2010 collected for this 

profile averaged $1,338 and ranged between $500 and $3,000 depending on the size and 

manufacturer.

3.4.2 International Competition

The U.S. market for wood-fueled heating products has been concentrated on the local 

scale in recent years. Manufacturers concentrate production where wood heat is in demand, 

which is in the Northeast and Northwest. Some regions of the country have specific emissions 

requirements on wood burning, so consumers may be restricted to buying stoves and heaters that 

can cater to local regulations (Frost & Sullivan, 2010). Domestic producers have traditionally 

faced some competition from European manufacturers in certain wood heat markets, but Asian 

manufacturers have been gaining market share, especially in the EPA-certified wood stove and 

currently exempt single-burn-rate stove markets (Frost & Sullivan, 2010).

Asian-based companies, especially those in China, have the advantage of relatively low 

overhead and labor costs compared with other companies worldwide (Frost & Sullivan, 2010). 

Although the products coming from these producers are lower in price, they are also lower in 

quality (Frost & Sullivan, 2010). However, money-conscious consumers have been willing to 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-26

settle for lower quality stoves as the economy remains uncertain (Frost & Sullivan, 2010). 

Companies from all over the world have been moving some manufacturing operations to China 

in an attempt to compete with Asian producers through low-cost production (Frost & Sullivan, 

2010). Still, U.S. manufacturers are likely to see increased competition from Asia in the future.

The masonry heater industry is one in which foreign manufacturers play a substantial 

role. Over two-thirds of masonry heaters installed in the United States are manufactured outside 

of the country, principally by one manufacturer (Seaton, 2010). Most United States companies 

build around 15 masonry heaters per year, typically constructed onsite by masons. Canadian and 

European producers sell masonry products through U.S. distributors, but most of these 

companies do not manufacture within the United States (Seaton, 2010). Some stove companies 

perform research and development, as well as assembly of wood stoves in the United States, but 

import cast parts and components from Europe and China (HPBA, 2010a). The pellet stove 

industry has seen increasing foreign competition in recent years. Many of the foreign 

manufacturers have made the business decision to sell products through American-owned 

businesses and thus the costs of EPA certification are sometimes passed on to the American 

seller/importer/licensee.

3.4.3 Future Market Trends

While there has been a steady decline in the residential markets for wood heaters, 

fireplaces, and hearth products, increases in oil and gas prices have led to substitution back to 

wood as a source of heat in 2007, in which a growth rate of 16.4% between 2007 and 2008 took 

place in these markets. However, demand for these products fell victim to the recession in 2009 

(Frost & Sullivan, 2010). A weak residential construction market coupled with a tight credit 

market decreased overall demand in the market for wood heating products, leading analysts to 

project a 2009 growth rate of −36.1% (Frost & Sullivan, 2010). The growth forecast for 2010 is 

expected to improve relative to 2009 to a rate of −4.1%, due in part to the residual effects of the 

severe 2009 winter temperatures and the financial incentive provided by the federal energy

efficient tax credit (Frost & Sullivan, 2010).

As the economy continues to recover beyond 2010, demand should trend upward as 

consumers look to cut heating costs with wood and biomass (Frost & Sullivan, 2010). New home 

construction and increased credit availability will further foster demand, which is expected to 

grow at a compound annual rate of 4.1% from 2009 to 2015 (Frost & Sullivan, 2010). The 

current regional demand patterns are expected to continue, with the Northeast and Northwest 

regions of the country driving wood fuel combustion demand, but analysts anticipate that the 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

3-27

wood heat product market will be embraced in other areas of the country in which wood and 

biomass are viable and inexpensive fuel sources (Frost & Sullivan, 2010).

Although the overall residential wood heat market is expected to grow, there may be 

variation in demand between individual product segments. Pellet and biomass stoves are 

expected to lead the way in demand as consumers look for options with sustainable fuel sources 

and cleaner-burning technologies (Frost & Sullivan, 2010). Outdoor wood boilers (hydronic 

heaters) saw a surge in demand throughout the 1990s and mid-2000s, a trend that is projected to 

continue (Northeast States for Coordinated Air Use Management, 2006). Future demand for 

primary and secondary wood-burning heating devices will be somewhat dependent on the price 

of wood fuel relative to electric and gas heat, as well as consumer preferences. Since fireplaces 

and masonry fireplaces typically are not effective heaters and purchases are based on the 

aesthetic value rather than function, future demand will likely stay in line with consumer 

preferences.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-1

SECTION 4

BASELINE EMISSIONS AND EMISSION REDUCTIONS

4.1 Introduction

This section presents the baseline emissions for the pollutants emitted by affected units 

and also the resulting emissions after imposition of the two options considered for the proposed 

NSPS. We present the baseline emissions and emission reductions for PM2.5 and also for other 

pollutants from affected units such as volatile organic compounds (VOCs) and carbon monoxide 

(CO). Baseline emissions were calculated using a 2008 base inventory and were then projected 

to future years beyond the promulgation of the rule in 2014 to 2022 and beyond, using emissions 

factors specific to the category of the affected unit (e.g., certified wood stove, pellet stove). 

These emissions factors are listed in the emissions memorandum for this proposed rule (Ec/R, 

2013). Emission reductions were calculated from the baseline emissions based on the considered 

emissions limits for each appliance type affected for each option analyzed, and the emission 

reductions were used as inputs to the benefits analysis presented in Section 7.

4.2 Background to Emissions Estimates

We used the EPA Residential Wood Combustion (RWC) emission estimation tool,

11

which is an AccessTM database that compiles nationwide RWC emissions using county level, 

process specific data and calculations. We summed the nationwide number of appliances and 

total tons of wood burned for each of the relevant product categories in the inventory. 

Table 4-1. RWC Emission Inventory Categories Used

Woodstove: fireplace inserts; EPA certified; non-catalytic

Woodstove: fireplace inserts; EPA certified; catalytic

Woodstove: freestanding, EPA certified, non-catalytic

Woodstove: freestanding, EPA certified, catalytic

Woodstove: pellet-fired, general

Woodstove: freestanding, non-EPA certified

Hydronic heater: outdoor

Furnaces: indoor, cordwood

 

11 rwc_2008_tToolv4.1_feb09_2010.zip.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-2

We then made some adjustments/assumptions to the baseline RWC inventory. First, we 

deleted data in the RWC for non-certified stoves and inserts, as these cannot be sold. With the 

exception of wood stoves, we applied the PM2.5 emission factors for each class to the total tons 

of wood burned and calculated an average emission rate/appliance/category. In the case of wood 

stoves, the RWC used an average of all PM10 AP-42 emission factors for wood stoves.12 The 

RWC assumes that PM10 and PM2.5 factors are identical. At a minimum, we believe that all new 

wood stoves meet the AP-42 PM10 emission factors for “Phase II” stoves (the current NSPS). As 

described below, we went a step further and assumed that all new shipments will meet the 

current Washington State limits, which are approximately 40% less than the current NSPS.

Second, we assumed that outdoor hydronic heaters and indoor hydronic heaters have the 

same emission profile.

Single burn rate stoves are not included in the RWC as separate identifiable units. We 

assumed that they would have the same baseline emission factor as freestanding non-certified 

woodstoves, i.e., 30.6 lb/ton of wood burned. We used the average tons burned per appliance 

factor as representative of these stoves as well. 

Masonry heaters are not included in the RWC database, and we were unable to identify a 

surrogate emission factor which could be used to estimate tons/appliance emissions. Therefore, 

we were not able to estimate emissions from these appliances for the purpose of this analysis.

We used this subset of the RWC database to calculate a baseline average emission 

rate/appliance/category, including an adjustment of the RWC emission factor to the current 

Washington State limits where warranted. We multiplied the total tons of wood burned for the 

appliance by the RWC emission factor (adjusted as appropriate) to calculate the total tons of 

PM2.5 emissions. We divided this value by the number of appliances in the category to calculate 

the baseline average PM2.5 emissions per individual appliance, and these results are shown in 

Table 4-2.

 

12 AP-42, Chapter 1.10, Residential Wood Stoves, Table 1.10-1. See:

http://www.epa.gov/ttnchie1/ap42/ch01/final/c01s10.pdf.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-3

Table 4-2. PM2.5 Tons per Appliance Estimate (Baseline)

Emission Inventory Category Pollutant

Baseline 

Emission factor 

(lb/ton)

Emissions 

(tons)

Tons per 

appliance/

yr

Woodstove: fireplace inserts; EPA certified; 

non-catalytic

Primary PM2.5

8.76 5,371 0.0041

Woodstove: fireplace inserts; EPA certified; 

catalytic

Primary PM2.5

9.72 2,023 0.0047

Woodstove: freestanding, EPA certified, 

non-catalytic

Primary PM2.5

8.76 6,745 0.0077

Woodstove: freestanding, EPA certified, 

catalytic

Primary PM2.5

9.72 3,769 0.0101

Woodstove: pellet-fired, general Primary PM2.5 3.06 1,798 0.0021

Hydronic heater: outdoor/indoor Primary PM2.5 27.6 50,427 0.1383

Woodstove: freestanding, non-EPA 

certifieda

Primary PM2.5

30.6 71,424 0.0324

Furnace: indoor, cordwood Primary PM2.5 27.6 2,471 0.0582

Primary PM2.5 30.6

a Non-EPA certified wood stove emission factor and tons/appliance were used to represent single burn rate stoves. 

4.2.1 Emissions Factors

The next step in the analysis was to develop emission factors representing potential NSPS 

options to reduce emissions. The following is a summary of the NSPS options considered in the 

proposal for each appliance type and examined in detail in Section 2. The NSPS options 

examined in this analysis (“Proposal” and “Alternative”) are based on phased-in compliance 

dates, or “steps,” for subcategories of appliances. Proposed Subpart AAA will regulate “room 

heaters” and includes adjustable burn rate stoves, single burn rate stoves, and pellet stoves. 

Proposed Subpart QQQQ will regulate “central heaters” and includes outdoor and indoor 

hydronic heaters and forced air furnaces. Proposed Subpart RRRR will regulate masonry heaters. 

Following is a summary of the current NSPS implementation assumptions for appliances within 

the subcategories under both the Proposed and the Alternative options. As mentioned in Section 

2, the Proposed option is a 2-step standard with compliance dates of effective date and 5 years 

after the effective date for different appliances. For the purposes of our Proposed option 

analyses, we used 2014 and 2019, respectively. The Alternative option is a 3-step standard with 

compliance dates of effective date, 3 years after the effective date, and 8 years after the effective 

date. For the purposes of our Alternative option analyses, we used 2014, 2017, and 2022, 

respectively. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-4

Subpart AAA (“room heaters”):

 These are adjustable burn rate, single burn rate, and pellet stoves: Proposal: Step 1

limit of 4.5 g/hr upon promulgation in 2014; and Step 2 limit of 1.3 g/hr five years 

after promulgation in 2019. Alternative: Step 1 limit of 4.5 g/hr upon promulgation 

in 2014; Step 2 limit of 2.5 g/hr three years after promulgation in 2017; and Step 3

limit of 1.3 g/hr eight years after promulgation in 2022. Note: The Step 1 limit is the 

1995 Washington State standard for non-catalytic stoves; the Alternative Step 2 limit 

is the 1995 Washington State standard for catalytic stoves; and the proposed Step 2 

(Alternative Step 3) limit is already met by the top performing catalytic, non-catalytic 

and pellet stove models, according to industry data.

13 Although previously

unregulated and a less developed technology than adjustable burn rate stoves, single 

burn rate stove designs have been undergoing R&D in anticipation of the proposed 

NSPS and cleaner designs are nearly market-ready.

14

Subpart QQQQ (“central heaters”):

 These are hydronic heaters (both outdoor and indoor): Proposal: Step 1 limit of 0.32 

lb/mm BTU heat output upon promulgation in 2014; and Step 2 limit of 0.06 lb/mm 

BTU heat output five years after promulgation in 2019. Alternative: Step 1 limit of 

0.32 lb/mm BTU heat output upon promulgation in 2014; Step 2 limit of 0.15 lb/mm 

BTU heat output three years after promulgation in 2017; and Step 3 limit of 0.06 

lb/mm BTU heat output eight years after promulgation in 2022. Note: The Step 1

limit is the EPA “Phase 2 “ voluntary program limit already met by 36 hydronic 

heater models (27 cord wood and 9 pellet models) built by 17 U.S. manufacturers; the 

Alternative Step 2 limit is already met by 11 hydronic heater models (6 cord wood 

and 5 pellet models) built by 6 U.S. manufacturers; and the proposed Step 2 

(Alternative Step 3) limit is already met by 4 hydronic heater models (2 cord wood 

and 2 pellet models) built by 2 U.S. manufacturers15, as well as over 100 European 

manufacturers per test method EN 303-05.

16

 Forced Air Furnaces: Proposal: Step 1 limit of 0.93 lb/mm BTU heat output upon 

promulgation in 2014; and Step 2 limit of 0.06 lb/mm BTU heat output five years 

after promulgation in 2019. Alternative: Step 1 limit of 0.93 lb/mm BTU heat output 

upon promulgation in 2014; Step 2 limit of 0.15 lb/mm BTU heat output three years 

after promulgation in 2017; and Step 3 limit of 0.06 lb/mm BTU heat output eight 

years after promulgation in 2022. Note: The Step 1 limit is based on test data from 

 

13 Final HPBA Heater Database version 2/25/10, EC/R received from Bob Ferguson for HPBA on 4/26/10

14 2/8/13 telephone discussion between Gil Wood, USEPA, and a manufacturer of single burn rate stoves.

15 See list of cleaner hydronic heaters participating in EPA’s voluntary program at 

http://www.epa.gov/burnwise/owhhlist.html

16 European Wood-Heating Technology Survey: An Overview of Combustion Principles and the Energy and 

Emissions Performance Characteristics of Commercially Available Systems in Austria, Germany, Denmark, 

Norway, and Sweden; Final Report; Prepared for the New York State Energy Research and Development 

Authority; NYSERDA Report 10–01; April 2010.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-5

development of Canadian standard B415.1-1017 and conversation with industry

regarding cleaner forced air furnace models currently being tested in R&D18. Forced 

air furnace designs able to meet the Alternative Step 2 and proposed Step 2 

(Alternative Step 3) limits may be based on technology transferred from hydronic 

heater designs. 

Subpart RRRR including masonry heaters:

 Masonry Heaters: Proposal / Alternative (same): Step 1 limit of 0.32 lb/mm BTU 

heat output upon promulgation in 2014 for large manufacturers (defined as 

manufacturers constructing ≥ 15 masonry heaters per year), with a 5-year (2019) 

small volume manufacturer compliance extension (for companies constructing < 15 

units/year). No other phased-in limits are being proposed. Note: Based on data 

submitted by the Masonry Heater Association19, over 10 models already meet this 

limit.

We developed adjusted emission factors to reflect the NSPS options discussed above, 

which were then used to calculate new average tons of emissions per appliance for each RWC 

appliance type. Reasonable adjustments were assumed for NSPS emission factors (as noted 

below) in order to not overstate emission reductions under the NSPS options; actual emission 

reductions may be somewhat greater than reductions resulting from our emission factor 

adjustments for the purpose of this analysis. Following is a description of how the RWC factors 

were adjusted:

 Woodstove: all EPA certified. We determined the ratio of emissions between the 

existing NSPS limits compared to the Washington state standards, for they are tighter 

than the existing NSPS and have been in existence since 1995. For both catalytic and 

non-catalytic devices, the Washington standard is 60% of the NSPS. We assumed this 

same ratio would apply to the emissions factors and multiplied the RWC emission 

factor by 60%. We used these adjusted RWC emission factors (shown in Table 4-2) 

as both baseline and Step 1 emission factors for catalytic and non-catalytic stoves. We 

made the reasonable assumption (in terms of estimating potential emission 

reductions) that the Step 1 emission factor was the same as the baseline emission 

factor, because nearly all current wood stove models already meet the Step 1 limit 

according to industry data.20 We also reasonably assumed that the Alternative Step 2 

emission factor for catalytic stoves was the same as the baseline and Step 1 emission 

factor because approximately 90% of the current catalytic models already meet the 

Alternative Step 2 limit, according to industry data.10 For the Alternative Step 2 

 

17 CSA B415.1-10, Performance Testing of Solid-Fuel-Burning Heating Appliances. Appendix D. March 2010.

18 2/8/13 telephone discussion between Gil Wood, USEPA, and a manufacturer of forced air furnaces.

19 Attachment to 3/25/2011 e-mail from Timothy Seaton of Timely Construction to Gil Wood and Mike Toney of 

USEPA.

20 Final HPBA Heater Database version 2/25/10, EC/R received from Bob Ferguson for HPBA on 4/26/10.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-6

emission factor for non-catalytic models, we scaled the Step 1 emission factor by the 

ratio of the Alternative Step 2 standard to the Step 1 standard (or 2.5/4.5 = 0.55). 

Likewise, for the proposed Step 2 (Alternative Step 3) emission factor for both 

catalytic and non-catalytic models, we scaled the Alternative Step 2 emission factor 

by the ratio of the proposed Step 2 (Alternative Step 3) standard to the Alternative 

Step 2 standard (or 1.3/2.5 = 0.52). For consistency with our shipment data and 

because the RWC database provides four separate emission factors for catalytic and 

non-catalytic, freestanding models and fireplace inserts, we used the weighted 

average value for all four wood stove types to represent the total population of 

adjustable burn rate woodstoves. Finally, we multiplied the resulting emission factors 

by the total tons burned for the appliance type (provided by the RWC database) and 

then divided that by the appliance population (also provided by the RWC database) to 

derive the tons/appliance of PM2.5 emissions. The emission factors and tons/appliance 

are shown in the green rows in Table 4-3.

 Woodstove: pellet fired, general. We used the RWC emission factor shown in Table 

4-2 as both the baseline and Step 1 emission factor for pellet stoves because nearly all 

current pellet stove models already meet the Step 1 standard according to industry 

data.21 The RWC emission factor for pellet stoves is quite low compared to other 

appliances, which leaves little room to adjust the factor. For the Alternative Step 2 

emission factor, we reduced the Baseline/Step 1 emission factor by only 10%, an 

adjustment based on industry data11 that most pellet models (80%) already meet the 

Alternative Step 2 level. For the proposed Step 2 (Alternative Step 3) emission factor, 

we scaled the Alternative Step 2 emission factor by the ratio of the proposed Step 2 

(Alternative Step 3) standard to the Alternative Step 2 standard (or 1.3/2.5 = 0.52). 

We multiplied the resulting emission factors by the total tons burned for pellet stoves 

and then divided that by the pellet stove appliance population to derive the 

tons/appliance of PM2.5 emissions. The emission factors and tons/appliance are shown 

in the orange row in Table 4-3. 

 Woodstove: freestanding, non-EPA certified (single burn rate stoves). As described 

above, we assumed that the freestanding non-EPA certified woodstove emission 

inventory category includes the population of single burn rate stoves. We therefore 

used the RWC emission factor for freestanding non-EPA certified woodstoves (30.6 

lb/ton) as the baseline emission factor for single burn rate stoves. For the Step 1 

emission factor, we used the same emission factor as a certified non-catalytic stove 

meeting the Washington state standards (i.e., 8.76 lb/ton) because the same standard 

is being proposed for single burn rate stoves as for adjustable burn rate stoves. 

Likewise, we used the same emission factors used for non-catalytic stoves for the 

Alternative Step 2 and proposed Step 2 (Alternative Step 3) emission factors. We 

multiplied the resulting emission factors by the total tons burned for this appliance 

category and then divided that by the appliance population to derive the 

tons/appliance of PM2.5 emissions. The emission factors and tons/appliance are shown 

in the grey row in Table 4-3. 

 

21 Final HPBA Heater Database version 2/25/10, EC/R received from Bob Ferguson for HPBA on 4/26/10
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-7

4.2.1.1 Hydronic Heater: Outdoor/Indoor.

As noted above, we assumed that indoor hydronic heaters (a minority of the hydronic 

heater population) have the same emission profile as the outdoor hydronic heater appliance 

category provided in the RWC. According to the EPA voluntary hydronic heater program, the 

“phase 2” heaters that are presumed to represent the Level I NSPS option are 90% cleaner than 

older unqualified units.22 We assume as described in our emissions memorandum that the 

majority of the existing inventory is represented by these unqualified units, and applied a 90% 

reduction to the RWC baseline emission factor shown in Table 4-2 (27.6 lb/ton) to derive the 

Step 1 emission factor (2.76 lb/ton). For the Alternative Step 2 emission factor, we assumed a 

50% reduction in the Step 1 emission factor since the Alternative Step 2 limit is approximately

50% of the Step 1 limit. Likewise, for the proposed Step 2 (Alternative Step 3) emission factor, 

we scaled the Alternative Step 2 emission factor by the ratio of the proposed Step 2 (Alternative 

Step 3) standard to the Alternative Step 2 standard (or 0.06/0.15 = 0.40). We multiplied the 

resulting emission factors by the total tons burned for the hydronic heater RWC appliance 

category and then divided that by the hydronic heater appliance population to derive the 

tons/appliance of PM2.5 emissions. The emission factors and tons/appliance are shown in the blue

row in Table 4-3.

4.2.1.2 Furnace: Indoor, Cordwood

We used the RWC emission factor shown in Table 4-2 (27.6 lb/ton) as the baseline 

emission factor. For Step 1, we scaled the baseline emission factor by 75% (to 6.9 lb/ton) 

because background material provided in the CSA standards review process stated that the 

emission limit associated with this method would result in an approximately 75% reduction in 

emissions compared to a non-qualifying furnace.23 The Alternative Step 2 and proposed Step 2 

(Alternative Step 3) limits of 0.15 lb/mmBTU and 0.06 lb/mmBTU, respectively, are the same as 

the hydronic heater limits. The baseline emission factors for each appliance category are also the 

same. Therefore we used the same Alternative Step 2 and proposed Step 2 (Alternative Step 3) 

emission factors used for hydronic heaters (1.38 lb/ton and 0.55 lb/ton, respectively). We 

multiplied the emission factors by the total tons burned for the cordwood furnace RWC 

appliance category and then divided that by the furnace appliance population to derive the 

tons/appliance of PM2.5 emissions. The emission factors and tons/appliance are shown in the 

lavender row in Table 4-3. See Table 4-3 for a summary of the emission factors and resulting 

 

22 See the EPA Burnwise Website: http://www.epa.gov/burnwise/participation.html.

23 Review draft of CSA B415.1-10, Performance Testing of Solid-Fuel-Burning Heating Appliances. Appendix C. 

March 2010.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-8

tons/appliance values for the baseline and NSPS options analyzed. Table 4-3 presents the 

baseline, Step 1, Alternative Step 2, and proposed Step 2 (Alternative Step 3) emission factors 

for each appliance type resulting from our assumptions and adjustments described above. We 

used the appropriate tons/appliance with annual shipment data to estimate annual PM2.5

emissions based on the Proposed and Alternative phased-in implementation dates.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-9

Table 4-3. NSPS Adjusted Factors for PM2.5

Emission Inventory Category

Baseline 

Emission

Factor 

(lb/ton)

Baseline 

Emissions/

Appliance

(tons)

Tons/

Appl/yr

Step 1 

Emission

Factor 

Tons/

Appl/yr

Alt. Step 2 

Emission 

Factor 

lb/ton

Alt. Step 2

Tons/appl

Step 2

(Alt. Step 3) 

Emission 

Factor 

lb/ton

Step 2

(Alt. Step 3) 

Tons/appl

Woodstove: fireplace inserts; 

EPA certified; non-catalytic

8.76 5,371 0.0041 8.76 0.0041 4.82 0.0023 2.51 0.0012

Woodstove: fireplace inserts; 

EPA certified; catalytic

9.72 2,023 0.0047 9.72 0.0047 9.72 0.0047 5.05 0.0025

Woodstove: freestanding, EPA 

certified, noncatalytic

8.76 6,745 0.0077 8.76 0.0077 4.82 0.0042 2.51 0.0022

Woodstove: freestanding, EPA 

certified, catalytic

9.72 3,769 0.0101 9.72 0.0101 9.72 0.0101 5.05 0.0052

Woodstove: pellet-fired, general 3.06 1,798 0.0021 3.06 0.0021 2.75 0.0019 1.43 0.0010

Hydronic heater: outdoor 27.6 5,043 0.1383 2.76 0.0138 1.38 0.0069 0.55 0.0028

Furnace: indoor, cordwood 27.6 9,053 0.1032 6.9 0.0258 1.38 0.0052 0.55 0.0021

Single Burn Rate Stoves

(freestanding, non-EPA

certified)

30.6 20,447 0.0324 8.76 0.0093 4.82 0.0051 2.51 0.0027
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-10

4.2.2 Voluntary Programs

Within these emissions projections are the effects not only of rules but also of various 

voluntary programs managed by EPA and states. Studies have shown that fine particle (PM2.5) 

concentrations in proximity to a typical outdoor wood boiler are likely to exceed the 24-hour 

National Ambient Air Quality Standards (NAAQS).

18 Thus, the EPA developed a hydronic 

heater voluntary program to encourage manufacturers to reduce impacts on air quality through 

developing and distributing cleaner, more efficient hydronic heaters. We developed the voluntary

program because it could bring cleaner models to market faster than the traditional federal 

regulatory process. Phase 119 emission level (0.60 pounds per million British Thermal Unit 

(lb/MMBTU) heat input) qualifying20 units are approximately 70% cleaner than typical 

unqualified units. After March 31, 2010, units that only meet the Phase 1 emission level are no 

longer considered “qualified models” under the voluntary program. Phase 2 emission level (0.32 

lb/MMBTU heat output) qualifying units are approximately 90% cleaner than typical unqualified 

units. Typically, qualified models have improved insulation, secondary combustion, separation 

of the firebox from the water jacket, and the addition of improved heat exchangers.

In addition to the voluntary program, the EPA provided technical and financial support 

for the Northeast States for Coordinated Air Use Management (NESCAUM) to develop a model 

rule which several states have adopted to regulate hydronic heaters. The model rule is a starting 

point for local regulatory authorities to consider, and they may need to also adopt additional 

actions due to site-specific concerns, e.g., local terrain, meteorology, proximity of neighbors and 

other exposed individuals. Thus, some regulatory authorities have instituted additional 

requirements, including bans on hydronic heaters in some areas.

The EPA also developed a similar voluntary partnership program for low-mass fireplaces 

(engineered, pre-fabricated fireplaces) and site-built masonry fireplaces. The original partnership 

agreements were dated February 19, 2009, and pertained to low-mass fireplaces. On July 4, 

2009, the program was expanded to other fireplaces, e.g., masonry fireplaces. Under this 

 

18 For more information on wood smoke health effects, See: “Smoke Gets in Your Lungs: Outdoor Wood Boilers in 

New York State,” prepared by Judith Schrieber, Ph.D., et al., for the Office of the Attorney General of New 

York. August 2005. See also: “Assessment of Outdoor Wood-fired Boilers,” prepared by NESCAUM, March 

2006 (revised June 2006).

19 Phase 1” and “Phase 2” emission levels refer to levels established in EPA voluntary programs. The earlier use of 

the term “Phase II” (with a Roman numeral) standard refers to standards established in the current subpart AAA 

for residential wood heaters.

20 The terms “qualified” and “unqualified,” or other similar terms, refer to models that meet the voluntary program 

performance levels. Later use of the terms “certified” and “uncertified,” or other similar terms, refers to models 

that are deemed to be in compliance with the NSPS emission limits.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-11

program, cleaner burning fireplaces are ones that qualify for the Phase 1 emissions level of 7.3 g 

of particles emitted per kg of fuel burned (approximately 57% cleaner than unqualified models) 

or the Phase 2 emissions level of 5.1 g/kg (approximately 70% cleaner than unqualified models). 

So far, 11 models have qualified under this voluntary program at the Phase 2 level. Typically, 

qualified models have improved insulation and added secondary combustion and/or a catalyst to 

reduce emissions. Some manufacturers have added closed doors to reduce the excess air and thus 

improve combustion. Some state and local agencies have needed to reduce emissions further and 

thus some have no-burn days and some have adopted bans of new fireplaces in some areas in 

order to attain the PM2.5 NAAQS.

4.2.3 Shipment Data Used to Estimate Baseline Emissions

We used data in the Frost & Sullivan Market (F&S) report21 on 2008 shipments by

product category, and F&S revenue forecasts which incorporated the weak economy in years 

2009 and 2010, to calculate the reduced number of shipments in years 2009 and 2010. Forced air 

furnaces were outside the scope of the F&S report. Instead, we used manufacturer estimates of 

total industry sales in 200822 and applied the F&S market factors to estimate shipments through 

2010. The F&S wood stove numbers included both certified and non-certified stoves, so we 

estimated numbers of non-certified stove shipments out of the total reported wood stove 

category.

23 These shipments were deleted from the total wood stove category shipments. We 

expanded the 2008 single burn rate estimate using the F&S factors. Our estimates of annual 

shipments, truncated to 2022, are shown in Table 4-4. The full set of annual shipments data can 

be found in the emissions memo for this proposal. 

For years 2011 through 2038 (for the proposed NSPS) and 2011 through 2041 (for the 

alternative approach) estimated shipments are based on a forecasted revenue growth rate of 

2.0%, in keeping with the average annual growth in real GDP predicted by the Conference 

Board.

24 There is not a perfect correlation between shipments and revenue (for example, because 

of their higher unit cost, pellet stoves generate more absolute revenue than wood stoves), but as 

stated in our emissions memorandum, we think the overall trend in the projection is reasonable in 

the absence of specific shipment projections.

 

21 Market Research and Report on North American Residential Wood Heaters, Fireplaces, and Hearth Heating 

Products Market. Prepared by Frost & Sullivan. April 26, 2010. pp. 31-32.

22 NSPS Review and Comments. Confidential Business Information submitted by manufacturer. September 2010.

23 Memo to Gil Wood, USEPA, from EC/R, Inc. Draft Estimated Emissions from Wood Heaters. February 15, 

2013. 

24 2013 Global Outlook projections prepared by the Conference Board in November 2012; http://www.conferenceboard.org/data/globaloutlook.cfm
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-12

Table 4-4. Estimated Annual Shipments by Category, 2008-2022

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Wood stoves 126,527 80,851 77,617 79,169 80,752 82,367 84,015 85,695 87,409 89,157 90,940 92,759 9

Single burn rate 

stoves

40,000 25,560 24,538 25,028 25,529 26,039 26,560 27,091 27.633 28,186 28,750 29,325

Pellet stoves 130,381 83,313 79,981 81,581 83,212 84,876 86,574 88,305 90,072 91,873 93,710 95,585 9

Furnace: indoor, 

cordwood

41,000 26,199 25,151 25,654 26,167 26,690 27,224 27,769 28,324 28,891 29,468 30,058 3

Hydronic 

heating systems

13,385 8,553 8,211 8,375 8,543 8,713 8,888 9,065 9,247 9,432 9,620 9,813 

Our cost effectiveness analysis (CE)25 assumes a 20-year model design lifespan as well as 

a 20-year use/emitting appliance lifespan. These assumptions were made to best characterize the 

actual model design and use lifespans given that many models developed for the 1988 NSPS are 

still being sold (after 25 years), many “new” models still have the same internal working parts 

with merely exterior cosmetic changes, and most stoves in consumer homes emit for at least 20 

years and often much longer. Therefore our CE analysis tracks shipments through year 2038 for 

the proposed NSPS and through year 2041 for the alternative approach (i.e., assuming a 20 year 

design life for a model meeting the Step 2 limit in year 2019 under the proposed NSPS, and for a 

model meeting the Alternative Step 3 limit in year 2022 under the alternative approach). A

truncated summary of our actual shipment data which extended through years 2038 for the 

proposed NSPS and 2041 for the alternative approach can be found in the emissions memo for 

this proposal. See the CE analysis spreadsheets that are in the public docket for the complete 

shipment data.

4.3 Estimated PM2.5 Emissions from Shipments of New Appliances

As described above, we calculated the average emissions per appliance type using the 

emission factor for each category multiplied by the inventory value of total tons of wood burned 

 

25 See cost effective (CE) spreadsheets including for PM2.5 the 2019 Step 2 Wood Heater NSPS PM25 CE 7% 

Feb14_2013.xls for the CE analysis supporting the proposed NSPS, and the 3 Step Wood Heater NSPS PM25 CE 

7% Feb14_2013.xls for the alternative approach. All of these spreadsheets are found in the public docket for this 

rulemaking.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-13

divided by the number of appliances in the inventory population. This value was then multiplied 

by the number of shipments to calculate total emissions from each category per year under 

baseline conditions (i.e., in the absence of an NSPS). More information on these calculations is 

available in the emissions memorandum in the docket for this rulemaking.26

Table 4-5 on the next page shows a truncated summary of the estimated PM2.5 emissions 

(in tons) under baseline conditions through year 2022. We then estimated emissions under the 

proposed NSPS (Table 4-6) and under the alternative approach (Table 4-7) based on the 

respective assumptions and phase-in timelines for each. Under the proposed NSPS, the Step 1 

limit becomes effective in 2014 and the Step 2 limit in 2019; while under the alternative 

approach, the Step 1 limit becomes effective in 2014, the Step 2 limit in 2017, and the Step 3 

limit in 2022. (Note that the proposed Step 2 limit is the same as the alternative Step 3 limit, 

although the compliance dates differ.) The emission estimates assume that the total number of 

shipped units meet the standard in the year the standard is implemented. 

Tables 4-5, 4-6, and 4-7 show emission estimates out to year 2022 for comparison. These 

are truncated summaries. Our CE analysis tracks emission reductions out through 2057 for the 

proposed NSPS and through 2060 for the alternative approach, assuming a 20 year design life for 

a model meeting each phased-in limit, and best assumption that stoves shipped in the 20th year 

will be emitting in homes for another 20 years. See the cost-effectiveness analysis spreadsheets27

for all years of emission data, both baseline and under each NSPS option considered. These 

spreadsheets are available in the public docket for this rulemaking. 

Note: No emission tables are provided for Subpart RRRR regulating masonry heaters 

because emission estimates are not available for these appliances as explained earlier in this RIA 

section.

 

26 Memo to Gil Wood, USEPA, from EC/R, Inc. Draft Estimated Emissions from Wood Heaters. February 15, 2013. 

27 See cost effective (CE) spreadsheets including for PM2.5 the 2019 Step 2 Wood Heater NSPS PM25 CE 7% 

Feb14_2013.xls for the CE analysis supporting the proposed NSPS, and the 3 Step Wood Heater NSPS PM25 CE 

7% Feb14_2013.xls for the Alternative approach.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-14

Table 4-5. Estimated PM2.5 Emissions (Tons): Baseline

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 761 486 467 476 486 495 505 515 526 536 547 558 569 580 592

Single burn rate 

stoves

1,295 827 794 810 826 843 860 877 895 912 931 949 968 988 1,007

Pellet stoves 277 177 170 173 177 180 184 187 191 195 199 203 207 211 215

Furnace: indoor, 

cordwood

4,230 2,703 2,595 2,647 2,699 2,753 2,809 2,865 2,922 2,980 3,040 3,101 3,163 3,226 3,291

Hydronic 

heating systems

1,851 1,183 1,136 1,158 1,182 1,205 1,229 1,254 1,279 1,305 1,331 1,357 1,384 1,412 1,440

Total 8,414 5,376 5,161 5,265 5,370 5,477 5,587 5,699 5,812 5,929 6,047 6,168 6,292 6,417 6,546

Table 4-6. Estimated PM2.5 Emissions (Tons): Proposed Option

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 761 486 467 476 486 495 505 515 526 536 547 202 206 210 214

Single burn rate 

stoves

1,295 827 794 810 826 843 246 251 256 261 266 78 79 81 82

Pellet stoves 277 177 170 173 177 180 184 187 191 195 199 95 97 99 101

Furnace: indoor, 

cordwood

4,230 2,703 2,595 2,647 2,699 2,753 702 716 731 745 760 62 63 65 66

Hydronic 

heating systems

1,851 1,183 1,136 1,158 1,182 1,205 123 125 128 130 133 27 28 28 29

Total 8,414 5,376 5,161 5,265 5,370 5,477 1,760 1,795 1,831 1,868 1,905 464 473 482 492
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-15

Table 4-7. Estimated PM2.5 Emissions (Tons): Alternative Option

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 761 486 467 476 486 495 505 515 526 373 380 388 396 404 214

Single burn rate 

stoves

1,295 827 794 810 826 843 246 251 256 144 147 149 152 155 82

Pellet stoves 277 177 170 173 177 180 184 187 191 176 179 183 186 190 101

Furnace: 

indoor, 

cordwood

4,230 2,703 2,595 2,647 2,699 2,753 702 716 731 149 152 155 158 161 66

Hydronic 

heating systems

1,851 1,183 1,136 1,158 1,182 1,205 123 125 128 65 67 68 69 71 29

Total 8,414 5,376 5,161 5,265 5,370 5,477 1,760 1,795 1,831 906 925 943 962 981 492
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-16

From the tables above, we see that the PM2.5 emission reductions in 2022 are the same at 

6,054 tons. The average of the annual emission reductions between the year of rule 

promulgation, 2014, and the year that both options are fully implemented (2022) is 4,825 tons for 

the Proposed option and 4,878 tons for the Alternative option.

4.4 Methodology for Estimating VOC Emissions from New Units

We used the same methodology described in Section 4.3 to develop emission estimates 

for VOC emissions. Using the RWC database, we developed an estimate of VOC emissions per 

appliance using baseline emission factors. Then, using the same NSPS phase-in assumptions and 

anticipated emission reductions (i.e., that VOC reductions are comparable to PM2.5 reductions), 

we developed emission factors to be used in analyzing the NSPS options. Table 4-8 provides the 

VOC emission factors.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-17

Table 4-8. NSPS VOC Emission Factors

Emission Inventory Category

Baseline

Emission 

Factor

(lb/ton)

Emissions 

(tons)

Tons/

Appl/Yr

Step 1

Emission 

Factor

(lb/ton)

Step 1

Tons/

Appl/Yr

Alt. Step 2 

Emission 

Factor 

(lb/ton)

Alt. Step 2 

Tons/

Appl/Yr

Step 2

(Alt. Step 3) 

Emission 

Factor

(lb/ton)

Step 2

(Alt. Step 3) 

Tons/

Appl./Yr

Woodstove: fireplace inserts; 

EPA certified; non-catalytic

12 7,357 0.0056 12 0.0056 6.6 0.0031 3.432 0.0016

Woodstove: fireplace inserts; 

EPA certified; catalytic

15 3,121 0.0073 15 0.0073 15 0.0073 7.800 0.0038

Woodstove: freestanding, EPA 

certified, non-catalytic

12 9,240 0.0106 12 0.0106 6.6 0.0058 3.432 0.0030

Woodstove: freestanding, EPA 

certified, catalytic

15 5,817 0.0155 15 0.0155 15 0.0155 7.800 0.0081

Woodstove: pellet-fired, general 0.041 24 0.00030 0.041 0.00003 0.037 0.00003 0.019 0.00001

Hydronic heater: outdoor 11.7 2,138 0.0586 1.17 0.0059 0.59 0.0028 0.234 0.0012

Furnace: indoor, cordwood 11.7 3,838 0.0437 2.925 0.0109 0.59 0.0022 0.234 0.0009

Single burn rate stoves

(freestanding, non-EPA certified)

53 21,288 0.0561 12 0.0127 6.6 0.0070 3.432 0.0036
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-18

Using the same assumptions as we used for PM2.5, we calculated VOC emissions at 

baseline and under each NSPS option based on a 20-year model design lifespan for appliance 

shipments as well as a 20-year appliance life. Tables 4-9 through 4-11 provide the time series of 

VOC annual emissions estimates between 2008 and 2022 for the baseline, and the NSPS options 

considered under the proposed NSPS revision.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-19

Table 4-9. Estimated VOC Emissions (Tons): Baseline

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 1,085 693 666 679 692 706 720 735 750 765 780 795 811 828 844

Single burn rate 

stoves

2,243 1,433 1,376 1,403 1,431 1,460 1,489 1,519 1,549 1,580 1,612 1,644 1,677 1,711 1,745

Pellet stoves 4 2 2 2 2 2 2 3 3 3 3 3 3 3 3

Furnace: indoor, 

cordwood

1,793 1,146 1,100 1,122 1,144 1,167 1,191 1,214 1,239 1,263 1,289 1,315 1,341 1,368 1,395

Hydronic heating 

systems

785 502 481 491 501 511 521 532 542 553 564 575 587 599 611

Total 5,909 3,776 3,625 3,697 3,771 3,847 3,924 4,002 4,082 4,164 4,247 4,332 4,419 4,507 4,597

Table 4-10. Estimated VOC Emissions (Tons): Proposed Option 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 1,085 693 666 679 692 706 720 735 750 765 780 293 298 304 311

Single burn rate 

stoves

2,243 1,433 1,376 1,403 1,431 1,460 337 344 351 358 365 106 109 111 113

Pellet stoves 4 2 2 2 2 2 2 3 3 3 3 1 1 1 1

Furnace: indoor, 

cordwood

1,793 1,146 1,100 1,122 1,144 1,167 298 304 310 316 322 26 27 27 28

Hydronic heating 

systems

785 502 481 491 501 511 52 53 54 55 56 12 12 12 12

Total 5,909 3,776 3,625 3,697 3,771 3,847 1,410 1,438 1,467 1,496 1,526 438 447 456 465
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-2

0

Table 4-11. Estimated VOC Emissions (Tons): Alternative Option 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 1,085 693 666 679 692 706 720 735 750 541 552 563 574 586 311

Single burn rate 

stoves

2,243 1,433 1,376 1,403 1,431 1,460 337 344 351 197 201 205 209 213 113

Pellet stoves 4 2 2 2 2 2 2 3 3 2 2 2 2 3 1

Furnace: indoor, 

cordwood

1,793 1,146 1,100 1,122 1,144 1,167 298 304 310 63 64 66 67 68 28

Hydronic heating 

systems

785 502 481 491 501 511 52 53 54 28 28 29 29 30 12

Total 5,909 3,776 3,625 3,697 3,771 3,847 1,410 1,438 1,467 831 848 864 882 899 465
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-21

From the tables above, we can show that the VOC emission reductions in 2022 are the 

same for each option at 4,132 tons. The average of the annual emission reductions between the 

year of rule promulgation, 2014, and the year that both options are fully implemented (2022) is 

3,237 tons for the Proposed option and 3,241 tons for the Alternative option.

4.5 Methodology for Estimating CO Emissions from New Units

We used the same methodology described in Section 4.3 to develop estimates for CO 

emissions. Using the RWC database, we developed an estimate of CO emissions per appliance 

using baseline emission factors. Then, using the same NSPS phase-in assumptions and 

anticipated emission reductions (i.e., that CO reductions are comparable to PM2.5 reductions), we 

developed emission factors to be used in analyzing the changes in emissions from applying the 

NSPS options. Table 4-12 presents the CO emission factors.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-2

2

Table 4-12. NSPS CO Emission Factors

Emission Inventory Category

Baseline

Emission 

Factor

(lb/ton)

Baseline 

Emissions 

(tons)

Tons/

Appl/Yr

Step 1

Emission 

Factor

(lb/ton)

Step 1 

Tons/

Appl/Yr

Alternative 

Step 2 

Emission 

Factor 

(lb/ton)

Alternative 

Step 2 

Tons/

Appl./Year

Alternative 

Step 3 

Emission 

Factor 

(lb/ton)

Alternative 

Step 3

Tons/Appl./

Year

Woodstove: fireplace inserts; EPA 

certified; non-catalytic

140.8 86,323 0.0662 140.8 0.0662 77.4 0.0364 40.269 0.0189

Woodstove: fireplace inserts; EPA 

certified; catalytic

104.4 21,725 0.0509 104.4 0.0509 104.4 0.0509 54.288 0.0264

Woodstove: freestanding, EPA 

certified, non-catalytic

140.8 108,418 0.1241 140.8 0.1241 77.4 0.0683 40.269 0.0355

Woodstove: freestanding, EPA 

certified, catalytic

104.4 40,486 0.1082 104.4 0.1082 104.4 0.1082 54.288 0.0563

Woodstove: pellet-fired, general 15.9 9,344 0.0110 15.9 0.0110 14.31 0.0099 7.441 0.0052

Single burn rate stoves (freestanding, 

non-EPA-certified)

230.8 249,785 0.2442 140.8 0.1489 77.4 0.0819 40.269 0.0426

Hydronic heater: outdoor 184 33,618 0.0922 18.4 0.0922 9.2 0.0461 3.680 0.0184

Furnace: indoor, cordwood 184 60,355 0.6878 46 0.1719 9.2 0.0344 3.680 0.0138
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-23

Using the same assumptions as we used for PM2.5, we calculated CO emissions at 

baseline and for the two NSPS options we are considering. Table 4-13 shows the annual baseline 

emissions for CO for 2008 to 2022, and Tables 4-14 and 4-15 show the CO emissions under the 

Proposed and Alternative options. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-2

4

Table 4-13. Estimated CO Emissions (Tons): Baseline

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 10,918 6,976 6,697 6,831 6,968 7,107 7,249 7,394 7,542 7,693 7,847 8,004 8.164 8,327 8,494

Single burn rate 

stoves

9,766 6,241 5,991 6,111 6,233 6,358 6,485 6,614 6,747 6,882 7.019 7,160 7,303 7,449 7,598

Pellet stoves 1,438 919 882 900 918 936 955 974 994 1,014 1,034 1,055 1,076 1,097 1,119

Furnace: indoor, 

cordwood

28,198 18,019 17,298 17,644 17,997 18,357 18,724 19,098 19,480 19,870 20,267, 20,672 21,086 21,508 21,938

Hydronic heating 

systems

12,343 7,887 7,572 7,723 7,878 8,035 8,196 8,360 8,527 8,698 8,872 9,049 9,230 9,415 9,603

Total 62,663 40,042 38,440 39,209 39,993 40,793 41,609 42,441 43,290 44,156 45,039 45,940 46,858 47,796 48,751

Table 4-14. Estimated CO Emissions (Tons): Proposed Option

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 10,918 6,976 6,697 6,831 6,968 7,107 7,249 7,394 7,542 7,693 7,847 2,743 2,797 2,853 2,910

Single burn rate 

stoves

9,766 6,241 5,991 6,111 6,233 6,358 3,956 4,035 4,116 4,198 4,282 1,249 1,274 1,300 1,326

Pellet stoves 1,438 919 882 900 918 936 955 974 994 1,014 1,034 494 503 513 524

Furnace: indoor, 

cordwood

28,198 18,019 17,298 17,644 17,997 18,357 4,681 4,775 4,870 4,967 5,067 413 422 430 439

Hydronic heating 

systems

12,343 7,887 7,572 7,723 7,878 8,035 820 836 853 870 887 181 185 188 192

Total 62,663 40,042 38,440 39,209 39,993 40,793 17,661 18,014 18,375 18,742 19,117 5,080 5,181 5,285 5,391
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-2

5

Table 4-15. Estimated CO Emissions (Tons): Alternative Option

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Wood stoves 10,918 6,976 6,697 6,831 6,968 7,107 7,249 7,394 7,542 5,069 5,171 5,274 5,380 5,487 2,910

Single burn rate 

stoves

9,766 6,241 5,991 6,111 6,233 6,358 3,956 4,035 4,116 2,309 2,355 2,402 2,450 2,499 1,326

Pellet stoves 1,438 919 882 900 918 936 955 974 994 912 930 949 968 987 524

Furnace: indoor, 

cordwood

28,198 18,019 17,298 17,644 17,997 18,357 4,681 4,775 4,870 993 1,013 1,034 1,054 1,075 439

Hydronic heating 

systems

12,343 7,887 7,572 7,723 7,878 8,035 820 836 853 435 444 452 461 471 192

Total 62,663 40,042 38,440 39,209 39,993 40,793 17,661 18,014 18,375 9,719 9,913 10,112 10,314 10,520 5,391
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

4-26

From the tables above, we can show that the CO emission reductions in 2022 are the 

same for each option at 43,360 tons. The average of the annual CO emission reductions between 

the year of rule promulgation, 2014, and the year that both options are fully implemented (2022) 

is 32,559 tons for the Proposed option and 32,873 tons for the Alternative option.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-1

SECTION 5

COST ANALYSIS, ENERGY IMPACTS, AND EXECUTIVE ORDER ANALYSES

In this section, we provide the estimates of total compliance costs and background behind 

their estimation. In addition, we provide a qualitative economic impact analysis of the proposed 

rule’s impact on consumer and producer decisions, a qualitative discussion on unfunded 

mandates that may occur as a result of this final rule, and a partial analysis of the impacts of this 

proposal on employment. We used the direct annual compliance costs as an approximate 

measure of total social costs.

Given these constraints, several economic frameworks can be used to estimate the 

economic impacts and social costs of regulations; however, OAQPS has traditionally relied on 

partial equilibrium market models. Previous NSPS economic impact analyses for the residential 

wood stove market were prepared reflecting such a model standpoint. However, the current data 

do not provide sufficient details to develop a market model; the data that are available have little 

or no sector/firm detail and are reported at the national level. In addition, some sectors have 

unique market characteristics that make developing partial equilibrium models difficult.

Therefore, we have prepared the economic impact analysis using a qualitative partial equilibrium 

framework.

5.1 Background for Compliance Costs

5.1.1 Estimated Research and Development (R&D) Costs

5.1.1.1 Residential Wood Heaters (except for masonry heaters)

EPA has received various estimates of the costs to bring a wood heater from concept to 

completion, from $300,000 for a single model to $1,360,000 for a 4-firebox model line. A recent 

Hearth and Home article estimated the total cost to bring a model from conception to market as 

$645,000 to $750,000 for steel stoves and over $1 million for cast-iron, enameled wood stoves. 

The authors indicated that costs would decrease for separate models in the same line by up to 

25%. Based on this information, we estimate that a 4-model steel line would cost up to $328,125 

per model to develop. These costs include marketing, design, developing first generation, second 

generation and prototype units; NSPS and safety testing, equipment tooling, etc. The 

manufacturer supplying these figures for the article estimated that the NSPS and safety testing 

component of these costs would constitute $40,000 per model. This manufacturer said that 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-2

development time is 12 to 14 months for non-catalytic heaters and 10 to 12 months for catalytic 

heaters.34

Another manufacturer estimated costs of new product development, including design, 

prototype development, testing, tooling equipment and other manufacturing changes, marketing 

support, materials, training, and education to be in excess of $300,000 over an 8- to 12-month 

schedule for a relatively uncomplicated product. Costs will increase for products that have more 

sophisticated controls. 35 One other manufacturer estimated that their typical model development 

costs are around $200,000/model.36

Two manufacturers suggested a 14- to 18-month time frame is required to develop a new 

firebox, but added that it will take from 5 to 6 years of intensive engineering and R&D efforts to 

have a model line consisting of 4 boxes ready for manufacture. They agreed that knowledge of 

the process obtained during each firebox development will shorten (somewhat) the time 

necessary, but not enough to consider within a guiding framework. These manufacturers also 

provided estimated development costs for a 4-box model line, presented in Table 5-1 below.37

Table 5-1. Example of Manufacturers’ Estimates of Costs to Develop Model Line (4 

Fireboxes)

Cost 

Component

Estimated 

Costs Notes

Salaries $850,000 Using 2-full time experimented employees to bring the products to market, salaries 

and benefits are estimated at $160,000 per year for at least 5.3 years. Tasks include 

design, prototyping, testing, production-line integration, and marketing.

Laboratory 

Equipment

$50,000 In order to accelerate R&D and avoid validating each result with independent 

testing labs (too costly for most manufacturers), new testing equipment will need to 

be purchased in order to sample flue gases, measure test load weight loss, record 

data automatically, and analyze flue gases composition.

Prototypes $25,000 Numerous prototypes will be needed until the final product can be approved. For 

each firebox, estimate that 8 prototypes will be needed, at a cost of $700 each. 

Numerous samples of various components will also have to be purchased from 

vendors. 

Test Fuela$45,000 Each test costs at least $50 in fuel (assuming cribs are used), including waste. An 

estimated 150 tests will have to be conducted for each firebox, for a total of $7,500, 

or $30,000 for a 4-firebox model line based on crib testing. 

(continued)

 

34 James E. Houck and Paul Tiegs. There’s a Freight Train Comin’. Hearth and Home. December 2009.

35 Comments from United States Stove Company, Small Entity Representative. July 13, 2010.

36 Confidential Business Information.

37 NSPS Review/Revision, and Impact on Our Companies: A Manufacturer’s Position Statement. Prepared by Stove 

Builder International and United States Stove Company. June 2010.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-3

Table 5-1. Example of Manufacturers’ Estimates of Costs to Develop Model Line (4 

Fireboxes) (continued)

Cost 

Component

Estimated 

Costs Notes

Testing 

Servicesa

$150,000 Testing services for emissions, efficiency, and safety are estimated to last 

approximately 3 weeks for each firebox. At an average of $1,500 per day plus 

travel expenses, this amounts to approximately $25,000 for each firebox, or 

$100,000 for a 4-firebox model line based on crib testing.

Outside 

Consultants

$160,000 The average manufacturer will need outside help for design and testing. Testing 

equipment, knowledge of the test standard, and general guidance is normally 

offered by outside consultants (not necessarily certified EPA test labs). The average 

manufacturer will need approximately 300 hours of consulting services per year 

($40,000) for 4 years.

Re-tooling $120,000 For each firebox, new molds and jigs will need to be purchased or produced. 

Estimate that re-tooling charges will reach at least $30,000 per firebox, or $120,000 

for a 4-firebox model line.

Marketing $25,000 New pictures will need to be taken and all the current marketing material, including 

web sites and owner’s manuals, will have to be updated. 

Total $1,360,000 Equal to $340,000/model

a Note: As described in our unit cost memo, the costs originally provided by industry for this table were presumed 

to be based on crib wood testing, not both crib wood and cord wood testing. Therefore we increased the industrybased “Test Fuel” cost by 50% (to the $45,000 shown above) as well as the industry-based “Testing Services”

cost by 50% (to the $150,000 shown above) in order to estimate the additional cost to test with both crib wood 

and cord wood.

For this analysis, we used the costs provided in the Table 5-1 example, scaled to a single 

model and spread over a 6-year model development time frame. We prepared an annualized 

R&D cost estimate by separating cost elements into direct annual costs (salaries) vs. indirect 

annual costs (laboratory equipment, retooling and other capital costs). We estimated annual 

capital costs during the amortized R&D cost period as the fraction that the indirect costs (IAC) 

are of the Total Annual Cost, approximately 34% annually. Ongoing costs such as taxes, 

overhead, and other routine expenses would be incurred regardless of the NSPS standard, and are 

not included in this analysis. Table 5-2 shows the estimated annualized cost of $63,850 per 

model, assuming an amortization period of 6 years and an interest rate of 7%.

Table 5-2. Annual Cost Summary: Development of 4 Model Fireboxesa,b

Direct Annual Costs (DAC)

Operator labor $141,667 Annual salary cost from Table 1, spread over 6 years.”

Outside Consultants $26,667 Annual outside consultant cost from Table 1, spread over 6 years.”

Total Direct Costs (DC) $168,333

(continued)
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-4

Table 5-2. Annual Cost Summary: Development of 4 Model Fireboxesa,b (continued)

Indirect Annual Costs (IAC)

Laboratory Equipmenta$10,490 The laboratory equipment cost of $50,000 was amortized over 6

years at an interest rate of 7%. 

Re-toolingb$25,175 The re-tooling cost of $120,000 was amortized over 6 years at an 

interest rate of 7%.

Other Capital Costsb$51,400 Other capital costs include costs for prototypes ($25,000), test fuel 

($45,000), testing services ($150,000), and marketing ($25,000) 

and were amortized over 6 years at an interest rate of 7%. 

Total Indirect Costs (IAC) $87,065

Total Annual Cost $255,399 Annual cost for development of 4 model fireboxes.

Total Annual Cost $63,850 Average annual cost per firebox model.

a An amortization period of 6 years for laboratory equipment, retooling and other capital costs was chosen based on 

industry’s estimate that approximately 5 to 6 years of R&D are required to bring a product to market.

b As described in the unit cost memo, to estimate the additional cost to test with both cord wood and crib wood, the 

test fuel industry estimate of $30,000 based on crib only was increased by $15,000 and the testing services 

industry estimate of $100,000 based on crib only (which covered not only emissions testing but also efficiency 

and safety testing) was increased by $50,000.

5.1.2 Masonry Heaters

Masonry heaters manufacturing cost impacts vary by the type of producer and the type of 

certification method. According to one manufacturer,

38 the masonry heater industry in the U.S. is 

dominated by the Finnish firm Tulikivi, which manufactures and imports about half of the U.S. 

masonry heater units installed yearly through its network of installing distributors. The same 

manufacturer said that the second largest producer is a Canadian firm, Temp-Cast. The 

remainder of the industry is made up of “dozens” of small producers, with probably fewer than 

100 (or at least fewer than 200) generating any masonry revenue at all. Some commercial 

operations sell core units and/or design kits based on their own design, and other sell units they

license from other U.S. or foreign companies. Finally, some units are custom built. Based on this 

information, we assumed that 50% of masonry heaters sold per year in the U.S. are Tulikivi 

models and 35% are sold by other manufacturers. The remaining 15% of units are sold by

independent contractors. 

There are three major cost components to consider in evaluating the potential cost 

impacts of the proposed NSPS: research and development (R&D), certification testing, and 

licensing fees for use of a computer software package approved for use in certifying a model 

 

38 Comments: Residential Solid Fuel Burning Appliance SBREFA Process. Product Category: Masonry Heaters. 

July 13, 2010. Timothy Seaton, Timely Construction, Inc. p. 5.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-5

design. According to information provided by one manufacturer, capital R&D costs for a

masonry heater may be estimated at $250,000.

39 In the absence of more specific data regarding 

R&D costs for masonry heaters, we assumed R&D costs were the same as for other wood heater 

appliances—that is, $63,850 annually for a 6-year R&D amortization period. For facilities 

conducting R&D, these costs include the costs for certification testing. We estimate that the cost 

of testing a heater design in an EPA accredited lab to be approximately $10,000.40

This cost analysis also makes use of a unique software package based on a European 

masonry heater design standard. This standard has been verified in the laboratory and under field 

conditions to produce masonry heaters that would meet the proposed NSPS emission limits. The 

software produces for printout a certification for a given design application and the design 

definition documents as well as operating instructions customized to the given design, so that the 

software verification and certification record is created for and attached to the design. The 

resulting documents can be submitted as part of the certification application. The cost of this 

software to the user is approximately 1,000 Euros (approximately $1,500) for the package with a 

300 Euro (approximately $450) annual fee that commences in the second year following 

purchase.41

5.1.3 General Approach and Assumptions for Costs to Manufacturers

Manufacturers have told us that it takes several years to develop new models, and this is 

documented in the manufacturer’s cost memo.

42 We have spread the annualized R&D costs 

(shown in Table 5-2) over 6 years to best represent the time and funds needed to develop the 

complying models. For the purposes of our cost estimate, we have assumed that when the NSPS 

revisions are proposed, all manufacturers will begin serious efforts to develop complying 

models, although for some manufacturers we also know that they have been involved in 

intensive R&D efforts in anticipation of the proposed rule. 

We estimated both the average annual cost to manufacturers of each appliance type and 

then extended those costs to nationwide total annual costs. The basic components to each 

manufacturer’s estimated annual cost are:

 

39 Comments: Residential Solid Fuel Burning Appliance SBREFA Process. Product Category: Masonry Heaters. 

July 13, 2010. Timothy Seaton, Timely Construction, Inc. p. 14.

40 Letter to Lucinda Power, EPA, from Brian Klipfel, Fire Works Masonry. September 10, 2010.

41 E-mail from Timothy Seaton, Timely Construction Company, to Gil Wood, USEPA. April 21, 2011.

42 42 Memo to Gil Wood, USEPA, from Jill Mozier, EC/R, Inc. Estimated Wood Heater Manufacturer Cost Impacts. 

February 22, 2013.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-6

 Annualized R&D cost;

 Ongoing annual Certification cost; and

 Ongoing annual Reporting and Record Keeping cost.

The Annualized R&D costs (shown in Table 5-2, and based on the Table 5-1 costs) are 

by far the largest cost component and we have applied these costs to most models in our cost 

analysis—especially to models in previously unregulated appliance categories—in order to 

present a reasonable estimate of the costs given uncertainty over the precision of available 

estimate of the R&D cycle lifespan. For example, as noted above, instead of estimating the 

number of hydronic heater models that already meet a specific limit and will therefore merely

need to certify their emissions rather than undergo R&D, we instead assumed that 100% of 

hydronic heater models will undergo R&D beginning in 2013. We made similar reasonable 

assumptions for single burn rate stoves and forced air furnaces.

Under the Proposal scenario, one round of R&D is assumed—beginning in 2013 and 

ending in 2018—in order to meet the proposed Step 2 limit. Under the Alternative option, two 

rounds of R&D are assumed for all appliances except masonry heaters (for which there is only 

one standard with no additional phased-in standards to meet). Under the Alternative option, the 

first R&D round begins in 2013 and the second round begins in 2017 (which causes overlapping 

R&D costs in years 2017 and 2018 in this analysis)—in order to meet the interim Alternative 

Step 2 limit in 2017 and the Alternative Step 3 limit in 2022. We also reasonably assumed that of 

the models undergoing the first round of R&D costs, 80% of these models undergo and assume 

the second round of R&D costs in the Alternative scenario (i.e., we reasonably assumed that only

20% of models achieve the strictest limit in the first round of R&D).

Furthermore, for appliances like single burn rate stoves and forced air furnaces, which 

were previously unregulated (and also were not pushed technologically by a voluntary program, 

as hydronic heaters were), we have reasonably doubled R&D costs during years 2013 and 2014. 

This doubling of R&D cost estimates is to represent an intensification of the R&D efforts to meet 

the Step 1 limit and begin development of models to meet the stricter stepped limits—R&D 

efforts which industry has indicated are already ongoing.43

 

43 2/8/13 telephone discussion between Gil Wood, USEPA, and a manufacturer of forced air furnaces and single 

burn rate stoves.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-7

Note that all manufacturers, except for wood stoves that are subject to the current 1988

NSPS, will face ongoing certification costs above baseline conditions. However, in the 2013 to 

2018 time frame under the Proposal option and in the 2013 to 2022 time frame under the 

Alternative option, we have incorporated these costs as part of the overall R&D expenditures. 

After 2018 under the Proposal option and after 2022 under the Alternative option, the ongoing 

certification costs will be the only NSPS related costs faced by manufacturers besides ongoing 

reporting and recordkeeping costs. 

Regarding certification costs, we have assumed a cost of $10,000 per model for pellet 

stoves, single burn rate stoves and masonry heaters; and we have assumed a cost of $20,000 per 

model for hydronic heaters and forced air furnaces.44 We have spread these costs out over the 5 

year certification life, assuming annual certification costs for one-fifth of the models.

For example, pellet stoves will incur certification costs in advance of complying with 

more stringent limits. As explained in the manufacturer’s cost memo,

45 approximately 30% of 

existing pellet stove models are expected to comply with the proposed Step 2 and Alternative 

Step 3 standard. However, in order to be sold, these stove models would now be required to 

demonstrate compliance with an emissions limit, incurring an upfront cost of $10,000 per model 

to become certified. The same cost memo also discusses our assumption that one fifth of the 

pellet stove models will certify in any given year. 

We based reporting and recordkeeping (R&R) costs on the annual average costs derived 

from development of the Information Collection Request (ICR) supporting statements.

46 These 

are reasonable annual estimates of the ongoing R&R burden to manufacturers associated with the 

Proposal and Alternative scenarios. (We do not expect the R&R burden to differ substantially 

between the two scenarios.)

The certification and reporting and recordkeeping costs were estimated to be incurred by 

manufacturers for the full 20-year model design lifespan.47 Under the Proposal, we estimated 

costs from 2013 through 2038—that is, 20 years after the 2019 compliance year marking the 

beginning of the model lifespan designed to meet the Proposal Step 2 limit. Under the 

 

44 Conversation with Dennis Brazier, Central Boiler. August 9, 2010.

45 Memo to Gil Wood, USEPA, from Jill Mozier, EC/R, Inc. Estimated Wood Heater Manufacturer Cost Impacts. 

February 22, 2013.

46 ICR Supporting Statements for the Proposed NSPS Subparts have not been finalized as of the date of this memo.

47 Memo to Gil Wood, USEPA, from Jill Mozier, EC/R, Inc. Unit Cost Estimates of Residential Wood Heating 

Appliances. February 21, 2013.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-8

Alternative, we estimated costs from 2013 through 2041—that is, 20 years after the 2022 

compliance year marking the beginning of the model lifespan designed to meet the Alternative 

Step 3 limit. We provide these costs in the manufacturer’s cost memo.

5.1.4 General Approach and Assumptions for Costs to Masonry Heater Manufacturers

As noted above, we addressed masonry heaters in a way which segmented the costs in 

keeping with the masonry heater market. There are three scenarios for potential cost impacts for 

large masonry heater manufacturers. In the case of Tulikivi and some U.S. firms, e.g., Timely

Construction, these companies have already invested in R&D in order to gain access to U.S. 

markets which restrict sales (e.g., Colorado) of uncertified units. These companies will face 

testing costs only, with an assumed total of nine tests conducted prior to the proposed 

compliance date (i.e., to certify a total of nine model lines). For purposes of our cost analysis, we 

assumed as shown in the unit cost memo that two additional companies will conduct R&D to 

develop two new models each to meet the proposed NSPS.

48 Finally, we have been told that 

Tulikivi will use the software certification approach to certify up to eight additional models. We 

also project as presented in the unit cost memo that the remaining 15% of custom built units will 

use the software certification approach to certify compliance with the proposed NSPS starting in 

2013 (estimated date of the proposed standards) and that they will continue to renew their license 

in the following years. 

As explained in the unit cost memo, we used data in the Frost & Sullivan Market (F&S) 

report49 on 2008 masonry heater shipments by product category and F&S revenue forecasts 

which incorporated the weak economy in years 2009 and 2010, to calculate the reduced number 

of shipments in years 2009 and 2010. For years 2011 through 2038 (for the Proposal option) and 

2011 through 2041 (for the Alternative option) estimated shipments are based on a forecasted 

revenue growth rate of 2.0%, in keeping with the average annual growth in real GDP predicted 

by the Conference Board.

50 For masonry heaters, our estimate of the number of custom built 

models is based on the average number of models sold per year in the 15% model category (i.e., 

85 per year). We assumed each custom manufacturer would sell 2 models per year, for a total of 

42 manufacturers participating in the software certification option.

 

48 U.S. EPA. Memorandum. Unit Cost Estimates of Wood Heating Appliances. February 21, 2013. Prepared by 

EC/R, Inc. 

49 Market Research and Report on North American Residential Wood Heaters, Fireplaces, and Hearth Heating 

Products Market. Prepared by Frost & Sullivan. April 26, 2010. P. 31-32.

50 2013 Global Outlook projections prepared by the Conference Board in November 2012; http://www.conferenceboard.org/data/globaloutlook.cfm.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-9

Under both the Proposal and Alternative options, most sales-weighted masonry heater 

units face a 2014 Step 1 compliance date with no other phased-in limits. However, under both 

the Proposal and Alternative options, companies that sell fewer than 15 units per year have until 

2019 to come into compliance. We have assumed that the large manufacturers will comply by

2014 for the units that only require testing and/or software certification, with those expenditures 

incurred annually starting in 2013. We also assumed that the 15% of custom built units will 

comply by 2019, but will begin certifying their units using the software certification approach as 

early as 2013, as noted above, as a selling point for their services. For those companies that start 

R&D when the NSPS is proposed in 2013, we have assumed that they will spread these costs 

over the 6-year period from 2013 through 2018 for the four models affected, under both the 

Proposal and Alternative options.

5.1.5 General Approach and Assumptions for All Appliances

Below is a list of approach and assumptions for estimating costs for each category of 

appliances affected by this proposal, as taken from the manufacturer cost memo:

51

1. Nationwide Annual Cost assumes R&D investment is amortized over 6 years (2013 

through 2018). Ongoing certification costs are incurred through 2038 (based on a 

model brought to market in 2019 with a lifespan of 20 years), except for woodstoves 

which already incur certification costs under the existing NSPS.

2. Since certification is required every 5 years (except for the software certification 

option for masonry heaters), it is assumed that certification costs will be spread out so 

that 1/5 of the models certify each year.

3. This analysis considers additional costs resulting from the proposed NSPS. For wood 

stoves, the analysis assumes that 5% meet Step 2 already so that 95% of the models 

will undergo re-design to meet the Step 2 level. The costs modeled for years 2020 

through 2038 exclude the ongoing certification costs and ongoing reporting and 

recordkeeping costs incurred by wood stove manufacturers who already had to certify

and report under the existing NSPS.

4. For pellet stoves, the analysis assumes that 30% meet Step 2 already so that 70% of 

models undergo R&D re-design to meet Step 2. The R&D budget includes 

certification costs. The analysis also assumes that the 30% of the pellet stove models 

which already meet Step 2 will certify in an ongoing basis starting in 2013. The 

analysis reflects the certification costs beginning in 2013 for the 30% of models 

meeting Step 2, and beginning in 2019 for the remaining 70% of models which 

underwent R&D re-design.

 

51 U.S. EPA. Memorandum. Estimated Residential Wood Heater Manufacturer Cost Impacts. February 22, 2013. 

Prepared by EC/R, Inc. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-10

5. Based on conversations with industry in February 2013, single burn rate stoves and 

forced air furnaces have been undergoing R&D prior to 2013 to develop cleaner 

models. Because these devices were previously unregulated and may need to transfer 

technology from adjustable burn rate stoves and hydronic heaters respectively, this 

analysis assumes that these efforts will intensify in 2013 and 2014. Therefore 

estimated R&D costs are doubled in 2013 and 2014 in order to meet the 2014 Step 1 

standard while also beginning R&D to develop models to meet the more stringent 

2019 Step 2 standard.

6. For single burn rate stoves, forced air furnaces, and hydronic heating systems, the 

analysis assumes that only a small percentage meet Step 2 so that approximately

100% of the models undergo R&D re-design to meet Step 2. The R&D budget 

includes certification costs. Ongoing certification costs for the re-designed models are 

reflected in this analysis beginning in 2019.

7. For masonry heaters, the cost analysis assumes one round of R&D to meet 0.32 

lb/mmBTU standard (no additional stepped standards, although large manufacturers 

will be required to meet the limit in 2014, while small volume manufacturers will be 

given a 5 year extension until 2019 to meet the limit). For masonry heater 

manufacturers using software certification, the analysis assumes the purchased 

software will be used for certifying all models developed by that manufacturer.

8. Reporting and recordkeeping costs (R&R) [for all appliances but masonry heaters] 

are based on the annual average costs derived from the ICR and are estimates of the 

ongoing R&R burden to manufacturers associated with the proposed NSPS. The 

annual average nationwide R&R burden estimated to manufacturers for Subpart AAA 

is $440,443, and for Subpart QQQQ is $119,249. These R&R costs do not include the 

R&R burden to laboratories; the annual average nationwide R&R burden incurred by 

laboratories subject to requirements under Subpart AAA is estimated to be $75,745, 

and incurred by laboratories subject to requirements under Subpart QQQQ is 

estimated to be $50,496.

9. For Masonry Heaters, Reporting and recordkeeping costs (R&R) are based on the 

annual average costs derived from the ICR and are estimates of the ongoing R&R 

burden to manufacturers associated with the proposed NSPS. The annual average 

nationwide R&R burden estimated to manufacturers for Subpart RRRR is $98,788 for 

small/custom masonry heater manufacturers and $25,929 for large masonry heater 

manufacturers. These R&R costs do not include the R&R burden to laboratories; the 

annual average nationwide R&R burden incurred by laboratories subject to 

requirements under Subpart RRRR is estimated to be $37,872.

For the Alternative option for all appliances, here are the assumptions for cost estimations 

where they differ from those in the Proposed option:

1. Nationwide Annual Cost assumes R&D investment is amortized over 6 years (round 

one from 2013 through 2018 and round two from 2017 through 2022). Ongoing 

certification costs are incurred through 2041 (based on a model brought to market in 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-11

2022 with a lifespan of 20 years), except for woodstoves which already incur 

certification costs under the existing NSPS.

2. (Same as above)

3. This analysis considers additional costs resulting from the proposed NSPS. For wood 

stoves, the analysis assumes that 5% meet Step 3 already so that 95% of the models 

will undergo re-design in round one, and 80% of those 95% will require another 

round of R&D to meet the Step 3 level. The costs exclude the ongoing certification 

costs and ongoing reporting and recordkeeping costs incurred by wood stove 

manufacturers who already had to certify and report under the existing NSPS.

4. For pellet stoves, the analysis assumes that 30% meet Step 3 already so that 70% of 

models undergo re-design in round one, and 80% of those 70% require another round 

of R&D to meet Step 3. The R&D budget includes certification costs. The analysis 

also assumes that the 30% of the pellet stove models which already meet Step 3 will 

certify in an ongoing basis starting in 2013.

5. Based on conversations with industry in February 2013, single burn rate stoves and 

forced air furnaces have been undergoing R&D prior to 2013 to develop cleaner 

models. Because these devices were previously unregulated and may need to transfer 

technology from adjustable burn rate stoves and hydronic heaters respectively, this 

analysis assumes that these efforts will intensify in 2013 and 2014. Therefore 

estimated R&D costs are doubled in 2013 and 2014 in order to meet the 2014 Step 1 

standard while also beginning R&D to develop models to meet the more stringent 

2017 Step 2 and 2022 Step 3 standards.

6. For single burn rate stoves, forced air furnaces, and hydronic heating systems, the 

analysis assumes that only a small percentage meet Step 3 so that approximately

100% of the models undergo re-design in round one, and 80% require another round 

of R&D to meet Step 3. The R&D budget includes certification costs.

5.1.6 Labor Requirements for Monitoring, Recordkeeping and Reporting

The focus of this part of the analysis is on labor requirements related to the compliance 

actions of the affected entities within the affected sector. This analysis estimates the labor 

requirements associated with new reporting and recordkeeping requirements. 

The labor changes may either be required as part of an initial effort to comply with the 

new regulation or required as a continuous or annual effort to maintain compliance. We estimate 

up-front and continual, annual labor requirements by estimating hours of labor required for the 

monitoring, recordkeeping, and reporting efforts to maintain compliance.

The results of this analysis are presented in Table 5-3 for the Proposed NSPS option. The 

table breaks down the certification, quality assurance, reporting and recordkeeping burden and 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-12

labor estimates by appliance type for each of the proposed subparts and for the test labs to obtain 

and maintain testing accreditation. These estimates are presented in terms of the estimated hours 

required. These estimates are consistent with estimates EPA submitted as part of the Information 

Collection Requests (ICRs) that are in the Supporting Statements for the proposed rules.

We note that certification testing (once every 5 years unless a waiver is granted) costs of 

approximately $10,000 ($20,000 for hydronic heaters and forced air furnaces) per model line in 

2022 result in labor hours spent at the test lab, which are not included in this labor rate analysis.

In addition, each model that is developed (i.e., number of affected units) will face an annual 

estimated cost of $160,000 for the salaries of two full-time experimental employees for 5 years. 

This estimate should be regarded as a partial labor estimate, with other possible labor associated 

with new model development (such as re-tooling) left as unquantified and described qualitatively

in the manufacturer cost and unit cost impact memos.

Ongoing labor requirements are estimated at about 9,900 hours for the Proposed option. 

The labor estimate for the Alternative option will not be substantially different to that for the 

proposed option since there are no additional labor requirements for administrative matters under 

the Alternative option compared to the Proposed option.52 These ongoing labor requirements can 

be viewed as average sustained labor requirements required for affected entities to continuously

comply with the new regulations from 2019 and beyond. 

 

52 Memo to Gil Wood, USEPA, from EC/R, Inc. Residential Wood Heating Cost Effectiveness Analysis. 

February 26, 2013.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-13

Table 5-3. Estimates of Labor Requirements for Certification, Quality Assurance, 

Reporting, Recordkeeping, and Accreditation Requirements for the Proposed 

NSPS Optiona

Source/Emissions Point

Projected No. 

of Affected 

Units

Per-Unit 

One-Time 

Labor 

Estimate 

(Hours)

Total 

One-Time 

Labor 

Estimate 

(Hours)

Total Annual Labor 

Estimate (Hours)

Adjustable burn rate stoves 

not needing certification 

testing

125 0 0 1,784

Single burn rate stoves 20 0 0 283

Pellet stoves 125 0 0 1,779

Test Labs 6 0 0 597

Removable Label 1,017

Hydronic heaters—model 

development

90 0 0 1,290

Forced air furnaces—model 

development

38 0 0 539

Test Labs 4 0 0 398

Removable Label 332

Existing models at large 

manufacturers certified via 

testing

13 0 0 187

Existing models at large 

manufacturers certified via 

computer simulation

8 0 0 113

Existing models at small 

manufacturers certified via 

computer simulation

85 0 0 1,275

Test Labs 3 0 0 298.5

Removable Label 4.46

Total for Industry 517 0 0 9,893

a The labor requirements for the Alternative option are not substantially different than those for the Proposed 

option. 

Note: Totals may not sum due to independent rounding. The Agency assumes in its cost analysis of monitoring, 

recordkeeping, reporting, and testing requirements in the Information Collection Request (ICR) that only half of 

the currently available models for all appliance types would be certified and sold. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-14

5.2 Compliance Costs of the Proposed Rule

EPA’s engineering cost analysis estimates that the total annualized cost of the proposed 

rule option to manufacturers for the Proposed option is $15.7 million, calculated as an average of 

the annualized costs incurred from 2014 to 2022. For the alternative option, the total annualized 

cost is $28.3 million (all costs are reported in 2010 dollars) (EC/R, December 2011) Annualized 

costs are estimated at a 7% interest rate.53 We calculate the costs in this way in order to provide 

an average of annualized costs for these options from the time of rule promulgation in 2014 to 

the time of full implementation of both options, which occurs in 2022. Having an average 

annualized calculation for the costs allows for a reasonable measure of the costs to be incurred 

by manufacturers given the changes in costs year by year between 2014 and 2022 as shown in 

the manufacturer’s cost memo for this proposal. The total annualized costs for each year and for 

each option are in Table 5-4. 

With total annualized costs estimated at a 3% interest rate, the total annualized cost of the 

proposal option is $14.8 million, and $26.9 million for the alternative option (in 2010 dollars). 

More detailed information on the costs at a 3% interest rate can be found in the cost 

memorandum for this proposal. 

Under the proposed NSPS option, the costs in the 2014-2022 time frame fall most heavily

on manufacturers of hydronic heating systems (29%), followed by wood stoves (27%), then by 

pellet stoves (22%). The remaining 22% of the costs are distributed to forced-air furnace 

manufacturers (14%), manufacturers of single burn rate stoves (6%), and masonry heaters (2%).

 

53 EC/R, Inc. to U.S. EPA, Draft Memorandum. Estimated Residential Wood Heater Manufacturer Cost Impacts. 

February 22, 2013. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-15

Table 5-4. Summary of Average Annualized Nationwide Costs for 2014–2022 Time

Frame Under the Proposal and Alternative Options

Appliance Type Proposed Option Alternative Option

Wood Heaters $4,212,303 $8,090,026

Single Burn Rate Heaters $901,732 $1,540,600

Pellet Stoves $3,460,489 $6,255,536

Forced-Air Furnaces $2,252,284 $3,813,898

Hydronic Heating Systems $4,554,152 $8,302,026

Masonry Heaters $307,511 $307,511

Total Average Annual Cost for 2014–2022 Time Frame $15,688,471 $28,309,597

For the alternative option, the annualized costs fall most heavily of manufacturers of 

hydronic heaters (29%) and wood stoves (29%), followed by pellet stoves (22%). The remaining 

20% of the costs are distributed to manufacturers of forced air heaters (13%), single burn rate 

stoves (5%), and masonry heaters (2%).

The revised rule, as proposed would affect an estimated 2.7 million new residential wood 

heating devices between 2014 and 2022 assuming an average of ~296,000 new shipments 

annually as presented in the emissions memo for the proposal.

54 As shown previously in Table 4-

4 in Section 4 , annual shipments are forecasted to increase for all product types over the same 

time period.

To assess the size of the compliance costs relative to the value of shipments to end-use 

consumers, we compared industry-level compliance costs relative to projected sales for 2018 

since this is year between 2014 and 2022 and is a representative year suitable for this analysis. In 

this case, cost-to-receipts ratios approximate the maximum price increase needed for a producer 

to fully recover the annual compliance costs associated with a regulation. These industry-level 

cost-to-receipts ratios can be interpreted as an average impact on potentially affected firms in 

these industries all other things equal, and where ratios less than 1% suggest the rule will not 

have a significant impact using EPA’s SBREFA guidance as a basis. Results for affected 

industries for the 2014–2022 time frame can be found in Tables 5-4a and 5-4b.

 

54 U.S. EPA. Memorandum. Estimated Emissions from Wood Heaters. February 15, 2013. Prepared by EC/R, Inc. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-16

Under the NSPS proposal option, none of the six affected product types would have an 

annualized cost-to-receipts ratio of less than 1%. In the 2014-2022 time frame for this option, 

cost-to-receipts ratios range from 2.3% for pellet stoves to 6.4% for single burn rate stoves as 

shown in Table 5-5a. For the alternative option, cost-to-receipts ratios range from 4.0% for 

forced air furnaces to 10.7% for single burn rate stoves as shown in Table 5-5b. 

Table 5-5a. Industry Level-Annualized Compliance Costs (2010 dollars) as a Fraction of 

Total Industry Revenue by Product Type in the 2014–2022 Time Frame—

Proposal Option

Product Type

Total Annualized Costs

($ millions)

Product Sales in 2018

($ millions)a

Cost-to-Receipts 

Ratio

Wood stoves $4.2 $98.1 4.3%

Single burn rate stoves $0.9 $14.0 6.4%

Pellet stoves $3.5 $152.8 2.3%

Forced-air furnaces $2.3 $96.6 2.4%

Masonry heaters $0.3 $6.3 4.8%

Hydronic heating systems $4.5 $134.4 3.3%

a

Sales based on projected product shipments and average unit costs estimates. We use annual sales in 2018 to 

approximate annual sales for years from 2014 to 2022. Total annualized costs in this table are estimated at a 7% 

interest rate.

Sources: Masonry Heater Compliance Costs from Masonry Heater NSPS Annual Cost 12 8 11.xls. Received from 

EPA on December 16, 2011.

Unit Costs and Shipment Projections from Unit Cost Memo. Received by EPA in February, 2013.

Industry Compliance Costs from Wood Stove NSPS Annual Costs. Received by EPA February, 2013.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-17

Table 5-5b. Industry Level-Annualized Compliance Costs (2010 dollars) as a Fraction of 

Total Industry Revenue by Product Type in 2014–2022 Time Frame—

Alternative Option

Product Type

Total Annualized Costs

($ millions)

Product Sales in 2018

($ millions)a

Cost-to-Receipts 

Ratio

Wood stoves $8.1 $98.1 8.3%

Single burn rate stoves $1.5 $14.0 10.7%

Pellet stoves $6.2 $152.8 4.1%

Forced-air furnaces $3.8 $96.6 4.0%

Masonry heaters $0.3 $6.3 4.8%

Hydronic heating systems $8.3 $134.4 6.1%

a

Sales based on projected product shipments and average unit costs estimates. We use annual sales in 2018 to 

approximate annual sales for years from 2014 to 2022. Total annualized costs are estimated at a 7% interest rate.

Sources: Masonry Heater Compliance Costs from Masonry Heater NSPS Annual Cost 12 8 11.xls. Received from 

EPA on December 16, 2011.

Unit Costs and Shipment Projections from Unit Cost Memo. Received by EPA in February, 2013.

Industry Compliance Costs from Wood Stove NSPS Annual Costs. Received by EPA February, 2013.

5.3 How Might People and Firms Respond? A Qualitative Partial Equilibrium Analysis

Markets are composed of people as consumers and producers acting as economic agents 

to maximize utility or profits, respectively. One way economists illustrate behavioral responses 

to pollution control costs is by using market supply and demand diagrams. The market supply 

curve describes how much of a good or service firms are willing and able to sell to people at a 

particular price; we often draw this curve as upward sloping because some production resources 

are fixed. As a result, the cost of producing an additional unit typically rises as more units are 

made. The market demand curve describes how much of a good or service consumers are willing 

and able to buy at some price. Holding other factors constant, the quantity demanded is assumed 

to fall when prices rise. In a perfectly competitive market, equilibrium price (P0) and quantity

(Q0) are determined by the intersection of the supply and demand curves (see Figure 5-2).

5.3.1 Changes in Market Prices and Quantities

To qualitatively assess how the regulation may influence the equilibrium price and 

quantity in the affected markets, we assumed the market supply function shifts up by the 

additional cost of producing the good or service; the unit cost increase is typically calculated by 

dividing the annual compliance cost estimate by the baseline quantity (Q0) (see Figure 5-2). As 

shown, this model makes two predictions: the price of the affected goods and services are likely 

to rise and the consumption/production levels are likely to fall.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-18

The size of these changes depends on two factors: the size of the unit cost increase 

(supply shift) and differences in how each side of the market (supply and demand) responds to 

changes in price. Economists measure responses using the concept of price elasticity, which 

represents the percentage change in quantity divided by the percentage change in price. This 

dependence has been expressed in the following formula:55

PriceElasticityof Supply - PriceElasticityof Demand)

PriceElasticityof Supply Share of per-unit cost 

As a general rule, a higher share of the per-unit cost increases will be passed on to 

consumers in markets where

 goods and services are necessities and people do not have good substitutes that they

can switch to easily (demand is inelastic) and

 suppliers have excess capacity and can easily adjust production levels at minimal 

costs, or the time period of analysis is long enough that suppliers can change their 

fixed resources; supply is more elastic over longer periods.

 

55 For examples of similar mathematical models in the public finance literature, see Nicholson (1998), pages 444–

447, or Fullerton and Metcalf (2002).
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-19

consumer surplus = –[fghd + dhc]

producer surplus = [fghd − aehb] − bdc

total surplus = consumer surplus + producer surplus = −[aehb + dhc + bdc]

Figure 5-2. Market Demand and Supply Model: With and Without Regulation

Short-run demand elasticities for energy goods (electricity and natural gas), agricultural 

products, and construction are often inelastic. Specific estimates of short-run demand elasticities 

for these products can be obtained from existing literature. For the short-run demand of energy

products, the National Energy Modeling System (NEMS) buildings module uses values between 

0.1 and 0.3; a 1% increase in price leads to a 0.1 to 0.3% decrease in energy demand (Wade, 

2003). For the short-run demand of agriculture and construction, EPA has estimated elasticities 

to be 0.2 for agriculture and approximately 1 for construction (EPA, 2004). As a result, a 1% 

increase in the prices of agriculture products would lead to a 0.2% decrease in demand for those 

products, while a 1% increase in construction prices would lead to approximately a 1% decrease 

in demand for construction. Given these demand elasticity scenarios (shaded in gray), 

approximately a 1% increase in unit costs would result in a price increase of 0.1 to 1% 

(Table 5-6). As a result, 10 to 100% of the unit cost increase could be passed on to consumers in 

the form of higher goods/services prices. This price increase would correspond to a 0.1 to 0.8% 

decline in consumption in these markets (Table 5-7).
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-20

Table 5-6. Hypothetical Price Increases for a 1% Increase in Unit Costs

Market Demand 

Elasticity

Market Supply Elasticity

0.1 0.3 0.5 0.7 1 1.5 3

−0.1 0.5% 0.8% 0.8% 0.9% 0.9% 0.9% 1.0%

−0.3 0.3% 0.5% 0.6% 0.7% 0.8% 0.8% 0.9%

−0.5 0.2% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9%

−0.7 0.1% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8%

−1.0 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.8%

−1.5 0.1% 0.2% 0.3% 0.3% 0.4% 0.5% 0.7%

−3.0 0.0% 0.1% 0.1% 0.2% 0.3% 0.3% 0.5%

Table 5-7. Hypothetical Consumption Decreases for a 1% Increase in Unit Costs

Market Demand 

Elasticity

Market Supply Elasticity

0.1 0.3 0.5 0.7 1 1.5 3

−0.1 −0.1% −0.1% −0.1% −0.1% −0.1% −0.1% −0.1%

−0.3 −0.1% −0.2% −0.2% −0.2% −0.2% −0.3% −0.3%

−0.5 −0.1% −0.2% −0.3% −0.3% −0.3% −0.4% −0.4%

−0.7 −0.1% −0.2% −0.3% −0.4% −0.4% −0.5% −0.6%

−1.0 −0.1% −0.2% −0.3% −0.4% −0.5% −0.6% −0.8%

−1.5 −0.1% −0.3% −0.4% −0.5% −0.6% −0.8% −1.0%

−3.0 −0.1% −0.3% −0.4% −0.6% −0.8% −1.0% −1.5%

5.3.2 Partial Equilibrium Measures of Social Cost: Changes in Consumer and Producer 

Surplus

In partial equilibrium analysis, the social costs are estimated by measuring the changes in 

consumer and producer surplus, and these values can be determined using the market supply and 

demand model (as shown in Figure 5-2). Assuming linear market supply and demand curves as 

shown in Figure 5-2, the change in consumer surplus (CS) is measured as follows:

CS = − [Q1 × p] + [0.5 × Q × p]. (5.1)

where a coefficient of 0.5 is multiplied to the change in Q and P resulting from the shock 

to the markets based on the assumption of linear demand and supply curves in the diagram 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-21

above and applying principles of basic geometry. Higher market prices and lower quantities lead 

to consumer welfare losses. Similarly, the change in producer surplus (PS) is measured as 

follows:

PS = [Q1 × p] − [Q1 × t] − [0.5 × Q × (p − t)]. (5.2)

Higher unit costs and lower production levels reduce producer surplus because the net 

price change (p − t) is negative. However, these losses are mitigated because market prices tend 

to rise.

5.4 Social Cost Estimate

As shown in Tables 5-5a and 5-5b, the social cost as approximated by the annual 

compliance costs as a percent of sales represent a fraction of the affected product value that is 

greater than 1% for each of the product categories; this suggests that the shift of the supply curve 

may be relatively large for some product types and result in larger changes in market prices and 

consumption. EPA believes the national annualized compliance cost estimates provide a 

reasonable approximation of the social cost of this proposed rule. EPA believes this 

approximation is better for industries whose markets are well characterized as perfectly 

competitive. However, given the data limitations noted earlier, EPA believes the accounting for 

annual compliance costs is a reasonable approximation to inform policy discussion in this 

rulemaking. We were not able to prepare a full economic analysis of the impacts of this proposal 

on supply and demand, or the effects of such impacts on emissions (e.g. feedback effect on 

emissions). Most of the affected industries can be characterized as having a high degree of 

competitive market behavior. To shed more light on the level of market behavior, EPA ran 

hypothetical economic impact analyses and the results are in Tables 5-6 and 5-7.

5.5 Energy Impacts

Executive Order 13211 (66 FR 28355, May 22, 2001) provides that agencies will prepare 

and submit to the Administrator of the Office of Information and Regulatory Affairs, Office of 

Management and Budget, a Statement of Energy Effects for certain actions identified as 

“significant energy actions.” Section 4(b) of Executive Order 13211 defines “significant energy

actions” as any action by an agency (normally published in the Federal Register) that

promulgates or is expected to lead to the promulgation of a final rule or regulation, including 

notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: 

(1) (i) that is a significant regulatory action under Executive Order 12866 or any successor order, 

and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-22

or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs 

as a significant energy action.

This rule is not a significant energy action as designated by the Administrator of the 

Office of Information and Regulatory Affairs because it is not likely to have a significant adverse 

impact on the supply, distribution, or use of energy. In general, we expect the NSPS to improve 

technology,. By making the use of wood fuel less polluting and more efficient, we might see an 

increase in the use of wood fuel, which would relieve pressure on traditional coal- or petroleumbased energy sources. However, it is difficult to determine the precise energy impacts that might 

result from this rule because wood-fueled appliances compete with other biomass forms as well 

as more traditional oil, electricity, and natural gas. We have not determined the potential 

conversion to other types of fuels and their associated appliances if the consumer costs of woodfueled appliances increase and at what level that increase would drive consumer choice.

5.6 Unfunded Mandates Reform Act (UMRA)

5.6.1 Future and Disproportionate Costs

The UMRA requires that we estimate, where accurate estimation is reasonably feasible, 

future compliance costs imposed by the rule and any disproportionate budgetary effects. Our 

estimates of the future compliance costs of the proposed rule are discussed previously in this 

RIA. The nationwide annualized average compliance cost of this proposed rule for directly

affected appliances is $15.7 million in the 2014-2022 time frame (2010 dollars). Therefore, this 

proposed rule would not be subject to the requirements of Sections 202 or 205 of the UMRA.

This proposed rule would also not be subject to the requirements of Section 203 of 

UMRA because it contains no regulatory requirements that might significantly or uniquely affect 

small governments. The proposed rule would not apply to such governments and would impose 

no obligations upon them. We do not believe that there will be any disproportionate budgetary 

effects of the proposed rule on any particular areas of the country, state or local governments, 

types of communities (e.g., urban, rural), or particular industry segments.

5.6.2 Effects on the National Economy

The UMRA requires that we estimate the effect of the proposed rule on the national 

economy. To the extent feasible, we must estimate the effect on productivity, economic growth, 

full employment, creation of productive jobs, and international competitiveness of U.S. goods 

and services if we determine that accurate estimates are reasonably feasible and that such effect 

is relevant and material. The nationwide economic impact of the proposed rule is presented 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-23

earlier in this RIA chapter. This analysis provides estimates of the effect of the proposed rule on 

most of the categories mentioned above, and these estimates are presented earlier in this RIA 

chapter. The nature of this rule is such that it is not practical for us to use existing approaches, 

such as the Morgenstern et al. approach,

56 to estimate the impact on employment to the regulated 

entities and others from this proposed rule. We explain why this is true, and provide impacts 

associated with the monitoring, recordkeeping, and reporting requirements to provide some 

understanding of what impacts this proposal will have on employment for affected firms in 

section 5.7 below.

5.6.3 Executive Order 13045: Protection of Children from Environmental Health Risks and 

Safety Risks

Executive Order 13045, “Protection of Children from Environmental Health Risks and 

Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that (1) is determined to be 

“economically significant,” as defined under Executive Order 12866, and (2) concerns an 

environmental health or safety risk that EPA has reason to believe may have a disproportionate 

effect on children. If the regulatory action meets both criteria, EPA must evaluate the

environmental health or safety effects of the planned rule on children and explain why the 

planned regulation is preferable to other potentially effective and reasonably feasible alternatives 

considered by the Agency.

This proposed rule is not subject to Executive Order 13045 (62 FR 19885, April 23, 

1997) because the Agency does not believe the environmental health risks or safety risks 

addressed by this action present a disproportionate risk to children. The report, Analysis of 

Exposure to Residential Wood Combustion Emissions for Different Socio-Economic Groups, 

shows 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. One of the demographic variables examined for this 

report was that of children 18 years and younger.

This proposed rule is expected to reduce environmental impacts for everyone, including 

children. This action proposes emissions limits at the levels based on the best system of 

emissions reduction (BSER), as required by the Clean Air Act. Based on our analysis, we believe 

that this proposed rule would not have a disproportionate impact on children.

 

56 Morgenstern, R. D., W. A. Pizer, and J. S. Shih. 2002. “Jobs versus the Environment: An Industry-Level 

Perspective.” Journal of Environmental Economics and Management 43(3):412-436.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-24

The public is invited to submit comments or identify peer-reviewed studies and data that 

assess effects of early-life exposure to smoke from residential wood heaters.

5.6.4 Executive Order 12898: Federal Actions to Address Environmental Justice in Minority 

Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy

on environmental justice. Its main provision directs federal agencies, to the greatest extent 

practicable and permitted by law, to make environmental justice part of their mission by

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States.

EPA has determined that this proposed rule would not have disproportionately high and 

adverse human health or environmental effects on minority, low-income or indigenous

populations because it increases the level of environmental protection for all affected populations 

without having any disproportionately high and adverse human health or environmental effects 

on any population, including any minority, low-income or indigenous population. This proposed 

rule would establish national standards that would reduce primarily PM emissions from new 

residential wood heaters and, thus, would decrease the level of emissions to which all affected 

populations are exposed. The EPA defines “Environmental Justice” to include meaning

involvement of all people regardless of race, color, national origin, or income with respect to the 

development, implementation, and enforcement of environmental laws, regulations, and polices.

The EPA maintains an ongoing commitment to ensure environmental justice for all people, 

regardless of race, color, national origin, or income. Ensuring environmental justice means not 

only protecting human health and the environment for everyone, but also ensuring that all people 

are treated fairly and are given the opportunity to participate meaningfully in the development, 

implementation, and enforcement of environmental laws, regulations, and policies.

5.7 Employment Impacts 

[Note: The language in Section 5.7 will be replaced by new language supplied by EPA in 

a matter of a few days.] In addition to addressing the costs and benefits of the proposed rule, 

EPA has analyzed the impacts of this rulemaking on employment, which are presented in this 

section. While a standalone analysis of employment impacts is not included in a standard costbenefit analysis, such an analysis is of particular concern in the current economic climate of 

sustained high unemployment. Executive Order 13563, states, “Our regulatory system must
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-25

protect public health, welfare, safety, and our environment while promoting economic growth, 

innovation, competitiveness, and job creation” (emphasis added). Therefore, we seek to inform 

the discussion of labor demand and job impacts by providing an estimate of the employment 

impacts of the proposed regulation using labor requirements for the installation, operation, and 

maintenance of control requirements, as well as reporting and recordkeeping requirements. .

We have not quantified the rule’s effects on labor, or the effects induced by changes in 

workers’ incomes. What follows is an overview of the various ways that environmental 

regulation can affect employment. EPA continues to explore the relevant theoretical and 

empirical literature and to seek public comments in order to ensure that such estimates are as 

accurate, useful and informative as possible.

From an economic perspective labor is an input into producing goods and services; if 

regulation requires that more labor be used to produce a given amount of output, that additional 

labor is reflected in an increase in the cost of production. Moreover, when the economy is at full 

employment, we would not expect an environmental regulation to have an impact on overall 

employment because labor is being shifted from one sector to another. On the other hand, in 

periods of high unemployment, employment effects (both positive and negative) are possible. 

For example, an increase in labor demand due to regulation may result in a short-term net 

increase in overall employment due to the potential hiring of previously unemployed workers by 

the regulated sector to help meet new requirements (e.g., to install new equipment) or by the 

environmental protection sector to produce new abatement capital. When significant numbers of 

workers are unemployed, the opportunity costs associated with displacing jobs in other sectors 

are likely to be smaller. And, in general, if a regulation imposes high costs and does not increase 

the demand for labor, it may lead to a decrease in employment. 

Regulations set in motion new orders for pollution control equipment and services. New 

categories of employment have been created in the process of implementing environmental 

regulations. When a regulation is promulgated, one typical response of industry is to order 

pollution control equipment and services in order to comply with the regulation when it becomes 

effective, while closure or plants or facilities that choose not to comply occurs after the 

compliance date. Environmental regulation may increase revenue and employment in the 

environmental technology industry. While these increases represent gains for that industry, they

are costs to the regulated industries required to install the equipment. As with any pool of labor, 

the gross size of the labor pool does not reflect the net impact on overall employment after 

adjusting for shifts in other sectors.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-26

Regulated firms hire workers to design and build pollution controls. Once the equipment 

is installed, regulated firms hire workers to operate and maintain the pollution control 

equipment—much like they hire workers to produce more output. In some recent RIAs, EPA 

has relied on Morgenstern et al. (2002) to assess potential employment effects. Morgenstern et 

al. estimated the effects of pollution abatement expenditures on net employment in four highly 

polluting/regulated sectors (pulp and paper, plastics, steel, and petroleum refining). They

conclude that increased abatement expenditures generally have not caused a significant change in 

net employment in those sectors. In this RIA, we do not provide quantified employment effects 

based on Morgenstern et al due to on-going agency research and assessment of this issue.

Environmental regulations support employment in many basic industries. In addition to 

the increase in employment in the environmental protection industry (via increased orders for 

pollution control equipment), environmental regulations also support employment in industries 

that provide intermediate goods to the environmental protection industry. The equipment 

manufacturers, in turn, order steel, tanks, vessels, blowers, pumps, and chemicals to manufacture 

and install the equipment. Currently in most cases there is no scientifically defensible way to 

estimate the employment impacts in these intermediate goods sectors. 

5.7.1 Employment Impacts within the Regulated Industry

In recent RIAs we have applied estimates from a study by Morgenstern, Pizer and Shih

(2002)57 to derive the employment effects of new regulations within the regulated industry. (See, 

for example, the Regulatory Impact Analyses for the recently released final MATS and CSAPR 

regulations). Determining the direction of employment effects in the regulated industry is also 

challenging due to competing effects. Complying with the new or more stringent regulation 

requires additional inputs, including labor, and may alter the relative proportions of labor and 

capital used by regulated firms in their production processes. Morgenstern et al. (2002) 

demonstrate that environmental regulations can be understood as requiring regulated firms to add 

a new output (environmental quality) to their product mixes. Although legally compelled to 

satisfy this new demand, regulated firms have to finance this additional production with the 

proceeds of sales of their other (market) products. Satisfying this new demand requires additional 

inputs, including labor, and may alter the relative proportions of labor and capital used by 

regulated firms in their production processes.

 

57 Morgenstern, R. D., W. A. Pizer, and J. S. Shih. 2002. Jobs versus the Environment: An Industry-Level 

Perspective.‖ Journal of Environmental Economics and Management 43(3):412-436.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-27

More specifically, Morgenstern, Pizer, and Shih (2002) decompose the effect of 

regulation on net employment in the regulated sector into the following three subcomponents:

 The Demand Effect: higher production costs from complying with the regulation will 

raise market prices, reducing consumption (and production), thereby reducing 

demand for labor within the regulated industry. The “extent of this effect depends on 

the cost increase passed on to consumers as well as the demand elasticity of industry

output.” (p. 416)

 The Cost Effect: Assuming that the capital/labor ratio in the production process is 

held fixed, as “production costs rise, more inputs, including labor, are used to produce 

the same amount of output,” (p. 416). For example, to reduce pollutant emissions 

while holding output levels constant, regulated firms may require additional labor. 

 The Factor-Shift Effect: Regulated firms’ production technologies may be more or 

less labor intensive after complying with the regulation (i.e., more/less labor is 

required relative to capital per dollar of output). “Environmental activities may be 

more labor intensive than conventional production,” meaning that “the amount of 

labor per dollar of output will rise.” However, activities may, instead, be less labor 

intensive because “cleaner operations could involve automation and less employment, 

for example.” (p. 416)

The demand effect is expected to have an unambiguously negative effect on employment,

the cost effect to have an unambiguously positive effect on employment, and the factor-shift 

effect to have an ambiguous effect on employment. Without more information with respect to the 

magnitudes of these competing effects, it is not possible to predict the total effect environmental 

regulation will have on overall employment levels in the regulated sector.

Morgenstern et al. estimated the effects of pollution abatement expenditures on net 

employment in four highly polluting/regulated sectors (pulp and paper, plastics, steel, and 

petroleum refining). They conclude that increased abatement expenditures generally have not 

caused a significant change in net employment in those sectors. While the specific sectors 

Morgenstern et al. examined are different than the sectors considered here, the methodology that 

Morgenstern et al. developed is still an informative way to qualitatively assess the effects of this 

rulemaking on employment in the regulated sector.

While the theoretical framework laid out by Morgenstern et al. still holds for the

industries affected under this proposed NSPS, important differences in the markets and 

regulatory settings analyzed in their study and the setting presented here lead us to conclude that 

it is inappropriate to utilize their quantitative estimates to estimate the employment impacts from 

this proposal. The differences between the underlying regulations motivating the abatement 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

5-28

expenditures studied in Morgenstern et al. are potentially too many to allow for the direct 

transfer of their quantitative estimates to the proposed NSPS amendments. There are important 

differences between the affected industries and the four manufacturing industries studied by

Morgenstern et al. In addition to important differences between the regulated sectors, the 

pollution control strategies that form the basis of the cost inputs in the Morgenstern et al. 

analysis are primarily add-on or end-of-line pollution controls, in general covering more than 

70% of the abatement expenditures in most years and industries analyzed, as may be seen in 

Table 5-8. However, the control strategies analyzed for this RIA mostly include process and 

design changes to reduce emissions during the production of affected heaters, and not after these 

heaters are in operation.58 For instance, use of a catalyst combustor is common in wood stoves in 

order to reduce emissions and also improve heat efficiency. Retrofits are uncommon because 

replacing the wood stove is often a more economical alternative. For these reasons we conclude 

there are too many uncertainties as to the comparability of the Morgenstern et al. study to apply 

their estimates to quantify the employment impacts within the regulated sectors for this proposed 

regulation. 

Table 5-8. Percent of Abatement Expenditures on Changes in Production Processes59

Industry 1979 1983 1988 1991

Pulp and Paper 16% 20% 39% 53%

Plastics 15% 12% 25% 33%

Petroleum Refining 28% 43% 37% 39%

Iron and Steel 4% 7% 6% 8%

 

58 More detail on how emission reductions expected from compliance with this rule can be obtained can be found in 

Section 4 of this RIA. 

60 See http://www.census.gov/csd/susb/ and http://www.sba.gov/advo/research/data.html for additional details.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-1

SECTION 6

SMALL ENTITY SCREENING ANALYSIS

The Regulatory Flexibility Act as amended by the Small Business Regulatory

Enforcement Fairness Act (SBREFA) generally requires an agency to prepare a regulatory

flexibility analysis of any rule subject to notice and comment rulemaking requirements under the 

Administrative Procedure Act or any other statute, unless the agency certifies that the rule will 

not have a significant economic impact on a substantial number of small entities. Small entities 

include small businesses, small governmental jurisdictions, and small not-for-profit enterprises.

After considering the economic impact of the proposed rule on small entities, the 

screening analysis indicates that we can not conclude that this proposed rule may not have a 

significant economic impact on a substantial number of small entities (or “SISNOSE”) for 

certain residential wood heating products covered under the revised NSPS proposal. For this 

analysis EPA considered sales and revenue tests for establishments owned by representative 

small entities that manufacture or construct residential wood heating devices.

6.1 Small Entity Data Set

The industry sectors covered by the proposed rule were identified during the development 

of the cost analysis (see Sections 3 and 5). The Statistics of U.S. Businesses (SUSB) provides 

national information on the distribution of economic variables by industry and enterprise size 

(U.S. Census, 2008a, 2008b). The Census Bureau and the Office of Advocacy of the Small 

Business Administration (SBA) supported and developed these files for use in a broad range of 

economic analyses.60 Statistics include the total number of establishments and receipts for all 

entities in an industry; however, many of these entities may not necessarily be covered by the 

final rule. SUSB also provides statistics by enterprise employment and receipt size.

The Census Bureau’s definitions used in the SUSB are as follows:

 Establishment: An establishment is a single physical location where business is 

conducted or where services or industrial operations are performed.

 Receipts: Receipts (net of taxes) are defined as the revenue for goods produced, 

distributed, or services provided, including revenue earned from premiums, 

commissions and fees, rents, interest, dividends, and royalties. Receipts exclude all 

revenue collected for local, state, and federal taxes.

 

60 See http://www.census.gov/csd/susb/ and http://www.sba.gov/advo/research/data.html for additional details.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-2

 Enterprise: An enterprise is a business organization consisting of one or more 

domestic establishments that were specified under common ownership or control. The 

enterprise and the establishment are the same for single-establishment firms. Each 

multi-establishment company forms one enterprise—the enterprise employment and 

annual payroll are summed from the associated establishments. Enterprise size 

designations are determined by the summed employment of all associated 

establishments.

Because the SBA’s business size definitions (SBA, 2013) apply to an establishment’s 

“ultimate parent company,” we assumed in this analysis that the “enterprise” definition above is 

consistent with the concept of ultimate parent company that is typically used for SBREFA 

screening analyses and the terms are used interchangeably.

6.2 Small Entity Economic Impact Measures

The analysis generated a set of establishment sales tests (represented as cost-to-receipt 

ratios) for NAICS codes associated with sectors listed in Table 6-1. Although the appropriate 

SBA size definition should be applied at the parent company (enterprise) level, we can only

compute and compare ratios for a model establishment owned by an enterprise within an SUSB 

size range (employment or receipts). Using the SUSB size range helps us account for receipt 

differences between establishments owned by large and small enterprises and also allows us to 

consider the variation in small business definitions across affected industries. Using 

establishment receipts is also a somewhat conservative approach, because an establishment’s 

parent company (the “enterprise”) may have other economic resources that could be used to 

cover the costs of the final rule. It should be noted that these impacts are for the 2014–2022 time 

frame; as mentioned earlier in this RIA, the annualized costs considered in this analysis reflect an 

average of the proposal’s compliance costs incurred by affected sources each year from 

promulgation through 2022.

6.2.1 Establishment Employment and Receipts

The sales test compares a representative establishment’s total annual compliance costs to 

the average establishment receipts for enterprises in several size categories.61 For industries with 

SBA employment size standards, we calculated average establishment receipts for each 

enterprise employment range (Table 6-2). For industries with SBA receipt size standards, we 

calculated average establishment receipts for each enterprise receipt range (Table 6-3). The 

analysis assumes that the majority of affected entities are covered under hardware manufacturing 

 

61 For the 1 to 20 employee category, we excluded SUSB data for enterprises with zero employees. These 

enterprises did not operate the entire year.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-3

(NAICS 332510) and heating equipment manufacturing (NAICS 333414). We use establishment 

data from the 2007 Economic Census because that data is the most recent release of public 

establishment-level information for the industries impacted by this proposal. 

Table 6-1. Revised NSPS Proposal for Residential Wood Heating Devices: Affected 

Sectors and SBA Small Business Size Standards

Industry Description

Corresponding 

NAICS

SBA Size Standard for Businesses 

(July 22, 2013)

Type of Small 

Entity

New single-family general contractors 236115 $33.5 million 

in annual receipts

Masonry

Masonry contractors 238140 $14.0 million 

in annual receipts

Masonry

Hardware manufacturing 332510 500 employees All product 

types

Heating equipment (except warm air) 

manufacturing

333414 500 employees All product 

types

Plumbing and heating equipment and 

supplies (hydronics) merchant

wholesalers

423720 100 employees All product 

types

All other home furnishing stores 442299 $19.0 million 

in annual receipts

Business

However, the revised NSPS proposal has the potential to affect small entities classified as 

new home construction and masonry contractors. In addition, wholesalers of imported residential 

heating devices may also be affected if these establishments are required to certify imported 

products.

6.2.2 Establishment Compliance Cost

Annual entity compliance costs vary depending on the product type manufactured and the 

number of product models they would need to redesign under the revised NSPS proposal as 

mentioned in Section 5 of this RIA. For this analysis compliance costs were estimated based on 

the average development costs defined in the engineering cost analysis, presented in Section 5-1. 

The analysis assumes that manufacturers have between two and seven model fireboxes that 

would be subject to the new NSPS. There is limited information on the actual number of model 

fireboxes associated with small businesses. Hence, for purposes of the small entity screening 

analysis, we assumed that smaller companies maintain fewer than three firebox models that 

would be subject to the revised NSPS. In the absence of better data, EPA believes that between 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-4

one and three firebox models is a reasonable assumption for our analysis of impacts to 

potentially affected small businesses.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-5

Table 6-2. Average Receipts for Affected Industry by Enterprise Employment Size: 2007 ($2010 million/establishment)

SBA Size 

Standard 

for Businesses 

(effective Julyy

22, 2013)

Owned by Enterprises with Employment Ranges:

NAICS NAICS Description

All 

Enterprises

Fewer than 

20 

Employees

22 to 99 

Employees

100 to 499 

Employees

500 to 749 

Employees

750 to 999 

Employees

1,000 to 

1,500 

Employees

1,500+ 

Employees

332510 Hardware 

manufacturing

500 employees $13.27 $1.33 $7.71 $26.26 $72.83 $62.18 $37.90 $62.27

333414 Heating equipment 

manufacturing

500 employees $13.78 $1.27 $11.17 $39.81 NA NA NA $8.09 

423720 Plumbing and heating 

equipment wholesalers

100 employees $7.49 $2.58 $9.68 $10.79 $9.82 NA NA $0.14 

NA = Not available. SUSB did not report this data due to concern with disclosure of confidential information or other reasons. Escalation of average receipts 

from 2007 to 2010 is accomplished by use of the annual GDP implicit price deflator (available at 

http://research.stlouisfed.org/fred2/series/GDPDEF/downloaddata?cid=21). The escalation ratio between 2007 and 2010 is 1.045. 

Table 6-3. Average Receipts for Affected Industry by Enterprise Receipt Range: 2007 ($2010 million/establishment)

SBA Size 

Standard 

for Businesses 

(effective July

22, 2013)

Owned By Enterprises with Receipt Range: 

NAICS

NAICS 

Description

All 

Enterprises

Less than 

100K 

Receipts

100 to 

499K 

Receipts

500 to 

999K 

Receipts

1,000 to 

4,999K 

Receipts

5,000 to 

9,999K 

Receipts

10,000 to 

49,999K 

Receipts

50,000 to 

99,999K 

Receipts

100,000K + 

Receipts

236115 New single-family 

general contractors

$33.5 million in 

annual receipts

$1.77 $0.05 $0.29 $0.77 $2.24 $7.907 $19.34 $59.14 $269.93

238140 Masonry 

Contractors

$14.0 million in 

annual receipts

$1.08 $0.05 $0.27 $0.77 $2.232 $7.37 $18.64 $48.03 $59.26

442299 All other home 

furnishing stores

$19.0 million in 

annual receipts

$2.68 $0.05 $0.28 $0.78 $1.99 $6.14 NA NA $401.23

NA = Not available. SUSB did not report this data due to concern with disclosure of confidential information or other reasons. Escalation of average receipts 

from 2007 to 2010 is accomplished by use of the annual GDP implicit price deflator (available at 

http://research.stlouisfed.org/fred2/series/GDPDEF/downloaddata?cid=21). The escalation ratio between 2007 and 2010 is 1.045. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-6

Then, we computed per-entity compliance costs for representative establishments and for 

manufacturing each product type (see Table 6-4). For this analysis, the annualized costs as 

presented in Table 6-4 assumed the total model development costs for four model fireboxes 

spread over a 6-year model development time frame and scaled to a single model. Table 6-4 

shows the estimated average annualized cost of $60,000 per model and its use in deriving the 

national total compliance costs for the proposed option. Table 6-5 presents the same costs for the 

alternative option. This cost was assumed to be constant for most product types. Lower 

compliance cost for pellet stoves due to the fact that most existing models already comply with 

the regulation. Lower bound on compliance cost for masonry heaters consists of a nominal 

licensing fee ($200) for the use of computer simulation model software to certify the site built 

units. 

Table 6-4. Per-Entity Annualized Compliance Costs by Product Type—Proposed Option

($2010 millions)

Product Type

No. 

Establishments

Assumed Affected 

Models per 

Establishmenta

Annual 

Compliance Cost 

per Model Firebox

($ millions)

Total Industry 

Costs—Proposed 

Option

($ millions)

Wood stoves 34 3 $0.04 $4.21

Single burn rate stoves 3 7 $0.04 $0.90

Pellet stoves 29 4 $0.03 $3.46

Forced-air furnaces 7 7 $0.05 $2.25

Masonry heatersb48 2–8 < $0.001 to $0.003 $0.31

Hydronic heating systems 30 4 $0.04 $4.55

National Compliance Cost $15.7

a Table totals may differ because of rounding.

b Masonry heater establishments include 2 large and 4 medium manufacturers, and 42 small custom builders.

For each case in this analysis, the number of models each representative establishment 

must redesign to comply with the NSPS emission limits in the options analyzed in this RIA 

varies by product type. The total annualized compliance cost per establishment is calculated by 

multiplying the number of firebox models requiring redesign by the annualized cost per model 

($63,850). Table 6-6 presents the assumed number of models per establishment by product type. 

Figures 6-1 and 6-2 illustrate the distribution of compliances costs by product type.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-7

Table 6-5. Per-Entity Annualized Compliance Costs by Product Type—Alternative 

Option ($2010 millions)

Product Type

No. 

Establishments

Assumed Affected 

Models per 

Establishmenta

Annual 

Compliance Cost 

per Model Firebox

($ millions)

Total Industry 

Costs—Proposed 

Option

($ millions)

Wood stoves 34 3 $0.08 $8.09

Single burn rate stoves 3 7 $0.07 $1.54

Pellet stoves 29 4 $0.05 $6.25

Forced-air furnaces 7 7 $0.08 $3.81

Masonry heatersb48 2–8 < $0.001 to $0.003 $0.31

Hydronic heating systems 30 4 $0.08 $8.30

National Compliance Cost $28.3

a Table totals may differ because of rounding.

b Masonry heater establishments include 2 large and 4 medium manufacturers, and 42 small custom builders.

Table 6-6. Representative Establishment Costs Used for Small Entity Analysis ($2010)

Best Estimate

Number of models requiring redesign 2

Annual cost per model $63,850

Average annual cost per establishment $127,700

For the sales test, we divided the representative establishment compliance costs reported 

in Table 6-6 by the representative establishment receipts reported in Tables 6-2 and 6-3. This is 

known as the cost-to-receipt (i.e., sales) ratio, or the “sales test.” The “sales test” is the impact 

methodology EPA employs in analyzing small entity impacts as opposed to a “profits test,” in 

which annualized compliance costs are calculated as a share of profits.

Information on annual revenues or sales is more commonly available data for entities 

normally affected by EPA regulations, and profits data normally made available are often not the 

true profit earned by firms because of accounting and tax considerations. Revenues as typically 

published are usually correct figures and are more reliably reported when compared with profit 

data. The use of a “sales test” for estimating small business impacts for a rulemaking such as this
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-8

Figure 6-1. Population of Firebox Models and Average Models per Establishment by 

Product Type

one is consistent with guidance offered by EPA on compliance with SBREFA62 and is consistent 

with guidance published by the SBA’s Office of Advocacy that suggests that cost as a percentage 

of total revenues is a metric for evaluating cost increases on small entities in relation to increases 

on large entities (SBA, 2003).63 The annualized cost per sales for a company represents the 

maximum price increase in affected product needed for the company to completely recover the 

annualized costs imposed by the regulation. 

 

62 The SBREFA compliance guidance to EPA rule writers (EPA, 2006a) regarding the types of small business 

analysis that should be considered can be found at http://www.epa.gov/sbrefa/documents/rfaguidance11-00-

06.pdf, pp. 24-25. 

63 This compliance guide produced by SBA can be found at 

http://www.sba.gov/sites/default/files/rfaguide_0512_0.pdf. 

3

7

4

7

4

4

0

1

2

3

4

5

6

7

8

0

20

40

60

80

100

120

140

Wood Stoves Single Burn Rate 

Stoves

Pellet Stoves Forced Air 

Furnaces

Masonry Heaters Hydronic Heating 

Systems

Average No. of Firebox Models Per Establishment

Model Firebox Population

Total Model Population Average Models per Establishment
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-9

Figure 6-2. Distribution of National Compliance Costs by Product Type in 2014 to 2022

For purposes of this analysis, EPA assumes most small entities in the residential wood 

heating industry are likely to manufacture fewer than three distinctive firebox models and in 

many cases they would support only one model. We assume for this analysis that most small 

entities in this industry will manufacture an average of two distinctive firebox models. Hence,

EPA believes that the estimate in Table 6-6 above is the most representative establishment costs 

to assess impacts on small businesses. If the cost-to-receipt ratio is less than 1%, then we 

consider the rule to not have a significant impact on the establishment (and, company) in 

question. Table 6-7 presents the cost-to-receipt ratios for each category of establishments 

(establishments with ratios that exceed 1% under each case are highlighted) for the proposal 

option. Table 6-8 present these ratios for the alternative option.

Wood Stoves

0%

Single Burn Rate Stoves

15%

Pellet Stoves

2%

Forced Air Furnaces

37%

Masonry Heaters

2%

Hydronic Heating Systems

44%
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-10

Table 6-7. Cost-to-Receipt Ratio Results for the Proposal Option by NAICS Codea

NAICS Description

All 

Establishments

Fewer than 20 

Employees

22 to 99 

Employees

100 to 499 

Employees

332510 Hardware manufacturing 3.12% 19.74% 3.40% 0.99%

333414 Heating equipment manufacturing 1.89% 20.73% 2.34% 0.67%

423720 Plumbing and heating equipment 

wholesalers

3.50% 10.15% 2.71% 2.43%

NAICS Description Total

Less than 

100K 

Receipts

100 to 

499K 

Receipts

500 to 

999K 

Receipts

1,000 to 

4,999K 

Receipts

5,000 to 

9,999K 

Receipts

10,000 to 

49,999K 

Receipts

236115 New single-family general contractors 7.18% 231.81% 43.78% 16.39% 5.62% 1.78% 0.69%

238140 Masonry contractors 11.59% 232.50% 47.70% 16.54% 5.43% 1.72% 0.74%

442299 All other home furnishing stores 7.86% 224.82% 46.00% 17.02% 7.47% 3.84%

a All the cost to receipts results incorporate costs that are primarily R&D activities that firms will engage in to build appliance models that comply with the 

options analyzed in this RIA. The R&D cycle is estimated at 6 years, while the appliance life for all affected categories is 20 years. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-11

Table 6-8. Cost-to-Receipt Ratio Results for the Alternative Option by NAICS Codea

NAICS Description

All 

Establishments

Fewer than 20 

Employees

22 to 99 

Employees

100 to 499 

Employees

332510 Hardware manufacturing 5.22% 33.05% 5.69% 1.66%

333414 Heating equipment manufacturing 3.17% 34.70% 3.92% 1.12%

423720 Plumbing and heating equipment 

wholesalers

5.87% 17.00% 4.54% 4.07%

NAICS Description Total

Less than 

100K 

Receipts

100 to 

499K 

Receipts

500 to 

999K 

Receipts

1,000 to 

4,999K 

Receipts

5,000 to 

9,999K 

Receipts

10,000 to 

49,999K 

Receipts

236115 New single-family general contractors 12.03% 389.44% 73.55% 27.54% 9.44% 2.99% 1.16%

238140 Masonry contractors 19.47% 390.60% 80.14% 27.79% 9.12% 2.89% 1.24%

442299 All other home furnishing stores 13.20% 377.70% 77.28% 27.23% 13.00% 6.45%

a All the cost to receipts results incorporate costs that are primarily R&D activities that firms will engage in to build appliance models that comply with the 

options analyzed in this RIA. The R&D cycle is estimated at 6 years, while the appliance life for all affected categories is 20 years. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-12

6.2.2.1 Analysis Results

In our small entity analysis for the proposed option, using an annual compliance cost of 

$127,000 as the estimated cost borne by affected small entities, establishments in NAICS 

332510, 333414, and 423720 with fewer than 500 employees have cost-to-receipt ratios higher 

than 1%. Establishments in NAICS 236115, 238140, and 442299 with receipts less than $10 

million have cost-to-receipt ratios higher than 1%. For the alternative option, the impacts are 

higher than 1% for all establishments in any size class. 

After considering the economic impacts of this proposed rule on small entities, we cannot 

certify that this action will not have a significant economic impact on a substantial number of 

small entities. This certification is based on the economic impact of this action to all affected 

small entities across all industries affected. Using the estimate of impacts presented earlier in this 

chapter, we estimate that all small entities will have annualized costs of greater than 1% of their 

sales in all industries with fewer than 20 employees and NAICS 236115, 238140, and 442299 

with receipts less than $10 million. Those establishments in NAICS 332510, 333414, and 

423720 with cost-to-receipt ratios higher than 1% account for more than 80% of small entities. 

Establishments in NAICS 236115, 238140, and 442299 with cost-to-receipt ratios higher than 

1% account for more than 99% of small entities. Small entity impacts are higher than this for the 

alternative option. We thus conclude that we cannot certify that there is not a significant 

economic impact on a substantial number of small entities (SISNOSE) for this rule.

It should be noted that the cost to receipts analysis included in this RIA reflect the large 

majority of annualized costs that are composed of research and development (R&D) activities 

(nearly 90%, based on the manufacturers’ cost memorandum) that have a shorter life than the 

total life of affected appliances—six years for an R&D cycle as mentioned in section 5 of this 

RIA compared to 20 years for the life of affected appliances. The impacts on small entities 

should be understood in the context that a large share of the estimated annualized costs reflect 

expenses in the early years of the appliance life, and only a small share recurs each year over the 

entire appliance life of 20 years. In addition, the application of these costs for the options 

analyzed in this RIA will lead to a somewhat conservative (or, over-stated) cost estimate as 

stated previously in section 5.1.3. One example of this is that all hydronic heaters will undergo 

R&D beginning in 2013 to comply with either option analyzed; there is a small percentage of 

hydronic heaters that already meet the emission limits under each option considered in the RIA. 

Similar assumptions are also made in the cost estimates for single burn rate stoves and forced air 

furnaces. Given these two considerations, the costs that are included in the cost to sales analyses 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-13

presented in this RIA are somewhat conservative in nature, and the cost to receipts impacts 

shown above should be understood in that context. 

A sensitivity analysis showing the effect of the R&D cycle lifespan on the cost to sales 

estimates for each option is below. Table 6-9 shows how the model firebox costs that are input 

to the cost to sales (and small business) analyses will change with changes to the R&D cycle 

lifespan. 

 Table 6-9. Total Annual Cost (TAC) per Appliance Model – for Varying 

Annualized R&D Cycle Lifespans 

Annualized R&D 

Cycle Lifespan 

(Years)

TAC/Appliance Model (2010$) TAC per Establishment

6* $63,850 $127,700

10 40,022 80,044

20 22,418 44,836

*As mentioned in Section 5 of this RIA, six years represents the annualized R&D cycle lifespan 

incorporated in the cost estimates for the Proposed RWH NSPS rule options.

The total annual cost per appliance model is the value of costs included in the cost to 

sales estimates to calculate these values. Each small entity is expected to modify 2 appliance 

models on average in order to comply with the proposal, an assumption we estimated earlier in 

this section of the RIA. We assume each small entity owns only one establishment (or place of 

business). Hence, the total annual cost to each small entity is twice the cost per appliance model. 

The annual cost to sales in the RIA will change proportionately to a change in the TAC since the 

sales estimates in the analysis will remain constant. 

As shown in Table 6-9, with an increase in the R&D cycle lifespan from 6 to 10 years, 

the TAC/appliance model estimate falls to $40,022 from $63,850. The new TAC/appliance 

model estimate is 37% less than before. Thus, the cost to sales estimates will fall by 37% from 

the previous values. Finally, if the R&D cycle lifespan is reduced to 4 years, the TAC/appliance 

model estimate increases to $93,755 from $63,850. The new TAC/appliance model estimate is 

now 65% lower than before. Thus, the cost to sales estimates will decrease by 65% from the 

values that use an R&D cycle lifespan of 6 years. 

Table 6-10 contains estimates of the changes in the cost to sales estimates for the 

Proposed option with an increase in the R&D cycle lifespan to 10 and 20 years from 6 years. The 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-14

estimates with the change in R&D cycle lifespan to 10 and 20 years are in parentheses; the other 

values are those for the Proposed option. 

Table 6-10. Cost-to-Sales Ratio Sensitivity Analysis Results Reflecting Different 

R&D Cycle Lifespans for the Proposed Option by NAICS Code*

NAICS Industry 

Description

All 

Establishments 

Establishments 

with Fewer than 

20 Employees (%)

Establishments 

with Between 20 

and 99 

Employees (%)

Establishments 

with Between 

100 and 499 

Employees (%)

332510 Hardware 

manufacturing

3.12 (1.97, 1.09) 19.74 (12.44, 6.91) 3.40 (2.14, 1.19) 0.99 (0.62, 0.35)

333414 Heating 

equipment 

manufacturing

1.89 (1.19, 0.66) 20.73 (12.83, 7.26) 2.34(1.47, 0.82) 0.67 (0.42, 0.23)

423720 Plumbing and 

heating 

equipment 

wholesalers

3.50 (2.21, 1.23) 10.15 (6.39, 3.55) 2.71(1.71, 0.95) 2.43 (1.53, 0.85)

* The first value in parentheses is the cost to sales estimate for a 10 year R&D cycle lifespan; the 

second value is the cost to sales estimates for a 20 year R&D cycle lifespan. 

6.3 Initial Regulatory Flexibility Analysis 

An IRFA illustrates how EPA considers the proposed rule’s small entity effects before a 

rule is finalized and provides information about how the objectives of the rule were achieved 

while minimizing significant economic impacts on small entities. We provide a summary of 

IRFA elements; the preamble for this rule provides additional details.

6.3.1 Reasons Why Action Is Being Considered

These proposals were developed following a Clean Air Act (CAA) section 111(b)(1)(B) 

periodic review of the existing residential wood heater new source performance standards 

(NSPS).

6.3.2 Statement of Objectives and Legal Basis of Proposed Rule

The EPA is proposing to amend Standards of Performance for New Residential Wood 

Heaters, and to add two new subparts: Standards of Performance for New Residential Hydronic 

Heaters and Forced-Air Furnaces and Standards of Performance for New Residential Masonry

Heaters. These proposals are aimed at achieving several objectives, including applying tighter 

emission limits that reflect today’s best systems of emission reduction (BSER); eliminating 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-15

exemptions over a broad suite of residential wood combustion devices; revising test methods as 

appropriate; and streamlining the certification process. These proposals do not include any

requirements on heaters that are solely fired by gas or oil. In addition, theses proposals do not 

include any requirements associated with wood heaters or other wood-burning appliances that 

are already in use. The EPA continues to encourage state, local, tribal, and consumer efforts to 

change out (replace) older heaters with newer, cleaner, more efficient heaters, but that is not part 

of this Federal rulemaking.

These proposals were developed following a Clean Air Act (CAA) section 111(b)(1)(B) 

periodic review of the existing residential wood heater new source performance standards 

(NSPS). The current body of evidence justifies that revision of the current residential wood 

heaters NSPS is needed to capture the improvements in performance of such units and to expand 

the applicability of this NSPS to include additional wood-burning residential heating devices. 

The changes being proposed with this action are aimed at achieving several objectives, including 

applying tighter emission limits that reflect today’s best systems of emission reduction; 

eliminating exemptions over a broad suite of residential wood combustion devices; revising test 

methods as appropriate; and streamlining the certification process. 

6.3.3 Description and Estimate of the Number of Small Entities 

Small entities that EPA anticipates being affected by the standards would include almost 

all manufacturers of wood heaters listed in Section 2.2 of this document. EPA estimates that 

roughly 250–300 U.S. companies manufacture residential wood heaters. EPA believes that 

approximately 90% of these manufacturers meet the SBA small-entity definition of having fewer 

than 500 employees. 

6.3.4 Description and Compliance Costs

A discussion of the methodology used to estimate cost impacts is presented in Section 5 

of this RIA. 

As required by section 609(b) of the RFA, as amended by SBREFA, EPA has conducted 

outreach to small entities and convened a SBAR Panel to obtain advice and recommendation of 

representatives of the small entities potentially subject to the requirements of this rule. On 

August 4, 2010, EPA’s Small Business Advocacy Chairperson convened a Panel under section 

609(b) of the RFA. In addition to the Chair, the Panel consisted of representatives of the Director 

of the Outreach and Information Division within EPA’s Office of Air and Radiation, the Chief 

Counsel for Advocacy of the SBA, and the Administrator of the Office of Information and 

Regulatory Affairs within the Office of Management and Budget.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-16

Based on consultations with the SBA, and resulting from solicited self-nominations, we 

prepared a list of 30 potential small entity representatives (SERs), from residential wood heating 

appliance manufacturers (wood stoves, pellet stoves, hydronic heaters, forced-air furnaces, and 

masonry heaters), other wood burning appliance manufacturers (fireplaces, cook stoves), 

equipment suppliers, chimney sweeps, test laboratories, masons, and trade associations. Once the 

pre-Panel process began and potential SERs were identified, EPA held an outreach meeting with 

the potential SERs and invited representatives from SBA’s Office of Advocacy and the Office of 

Information and Regulatory Affairs within the Office of Management and Budget on June 29, 

2010, to solicit their feedback on the upcoming proposed rulemaking. Representatives from 26 of 

the 30 companies and organizations that we selected as potential SERs for this SBREFA process 

participated in the meeting (in person and by phone). At that meeting EPA solicited written 

comments from the potential SERs, which were later summarized and shared with the Panel as 

part of the Panel convening document.

After the SBAR Panel was convened, the Panel distributed additional information to the 

SERs on August 11 and August 19, 2010, for their review and comment and in preparation for 

another outreach meeting. On August 25, 2010, the Panel met with the SERs to hear their 

comments on the information distributed via email. The Panel received written comments from 

the SERs in response to the discussions at this meeting and the outreach materials. The Panel 

asked the SERs to evaluate how they would be affected and to provide advice and 

recommendations regarding early ideas to provide flexibility.

Many of the SERs and the Panel had concerns about the breadth of the potential options 

discussed for this rulemaking and the challenges EPA would face in potentially conducting 

rulemaking for all of these source categories at one time and the challenges that the small 

businesses would face in having to potentially comply with standards for all of these source 

categories at one time. The Panel recommended that EPA should consider focusing efforts first 

on emissions sources that have the greatest potential to impact public health through the 

magnitude of emissions and population exposure. The EPA has narrowed the scope of this 

proposal to focus on the sources with the greatest potential impacts on public health. The Panel 

was sensitive to the need to carefully develop a rule that will minimize business closures, while 

still achieving significant emission reductions. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-17

6.3.5 Panel Recommendations for Small Business Flexibilities

The Panel recommended that EPA consider and seek comment on an extensive range of 

regulatory alternatives to mitigate the impacts of the rulemaking on small businesses, including 

the options listed below. The following section summarizes the SBAR Panel recommendations. 

Consistent with the RFA/SBREFA requirements, the Panel evaluated the assembled 

materials and comments related to elements of the IRFA. A copy of the Final Panel Report 

(including all comments received from SERs in response to the Panel’s outreach meetings), as 

well as summaries of both outreach meetings that were held with the SERs, is included in the 

docket for the proposed rules. The following paragraphs are a subset of the full report.

The Panel encouraged EPA to consider flexibilities that will most directly minimize the 

small business burdens: Exemptions from the standards based on very low volume production, 

and delayed compliance dates for low volume production. The delayed compliance approach is 

predicated on the concept that it will take a number of years for manufacturers to recover the 

costs of the R&D investment in order to achieve compliance.

The Panel recommended that the EPA Administrator should consider the availability and 

feasibility of certification, testing labs, testing standards, and other requirements.

The Panel recommended that the EPA Administrator should consider emphasizing that 

the NSPS will address only new units, and the EPA Administrator should consider clarifying 

whether exemptions will be considered for historic replica equipment and historic property 

renovations.

EPA is looking at opportunities for reducing the burden on small entities of potential 

reporting, record keeping, and compliance requirements. For reporting and record keeping 

requirements in the revised NSPS, EPA is considering providing flexibilities similar to those in 

the 1988 NSPS. For example, the Panel recommended that EPA continue allowing 

manufacturers to keep records and report test results for a representative model appliance rather 

than testing and reporting results for each individual unit. 

Many SERs expressed concern about potential compliance requirements associated with 

the planned proposed standards. Specifically, SERs anticipated potential logjams at third-party 

testing facilities as a result of EPA’s regulating a broader range of product categories, which the 

SERs believe will slow down the certification process. In addition, many SERs are concerned 

about the costs associated with compliance requirements, including research and development, 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

6-18

preliminary testing and certification of new products and recertification of products approved 

under the 1988 NSPS. The Panel recommended that EPA consider ways to streamline

compliance certification, in particular, identifying flexible approaches and procedures that will 

reduce the burden and time for manufacturers to complete the application, testing and approval 

process for new model lines. For example, the Panel recommended that EPA consider allowing 

the use of International Standards Organization (ISO)-accredited laboratories and certifying 

bodies to expand the number of facilities that would be required for testing and certification of 

the new residential solid biomass combustion appliances. Additionally, the Panel recommended 

that EPA consider different compliance time frames for different product categories to reduce the 

potential for logjams at test labs and the overall impact on companies that manufacture multiple 

categories. Flexible compliance schedules would also help manufacturers of additional new 

appliances, such as hydronic heaters and forced-air furnaces, which were not subject to the 1988 

standards.

Consistent with the RFA/SBREFA requirements, the Panel evaluated the assembled 

materials and small-entity comments on issues related to elements of the IRFA. A copy of the 

Panel report is included in the docket for this proposed rule. We invite comments on all aspects 

of the proposal and its impacts on small entities.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-1

SECTION 7

HUMAN HEALTH BENEFITS OF EMISSIONS REDUCTIONS

7.1 Synopsis

Implementation of emissions limits required by the proposed residential wood heaters 

NSPS is expected to reduce direct emissions of PM2.5. These reductions result from the 

imposition of tightened and new PM emissions limits for a number of emissions categories as 

described in Section 2 of this RIA. In this section, we quantify the monetized benefits for this 

rule associated with reduced exposure to ambient fine particulate matter (PM2.5) resulting from 

the reduction of direct emissions of PM2.5. The total PM2.5 reductions are the consequence of the 

expected design changes to the affected appliances needed in order to meet the limits in the 

options analyzed in this RIA. We estimate the total monetized benefits for the proposed option to 

be $1.8 billion to $4.2 billion at a 3% discount rate and $1.7 billion to $3.8 billion at a 7% 

discount rate on a yearly average between 2014 and 2022. For the alternative option and same 

time frame, we estimate that the total monetized benefits are $1.9 billion to $4.2 billion at a 3% 

discount rate and $1.7 billion to $3.8 billion at a 7% discount rate. All estimates are in 2010$. 

These estimates reflect the monetized human health benefits of reducing cases of morbidity and 

premature mortality among populations exposed to PM2.5 reduced by this rule. 

Data, resources, and methodological limitations prevented EPA from monetizing the 

benefits from several important benefit categories. Included among the nonmonetized benefits 

are those associated with reduced exposure to about 3,200 tons of VOCs. VOCs are also 

precursors to ozone formation and therefore reducing health impact due to ozone exposure. 

Further, this rule would reduce each year 33,000 tons of CO, black carbon emissions, several 

HAP emissions such as benzene, formaldehyde, and dioxin. This rule will also reduce ecosystem 

effects, and visibility impairment due to PM emissions.

7.2 PM2.5-Related Human Health Benefits

This rule is expected to reduce direct emissions of PM and emissions of VOCs, which are 

precursors to formation of ambient PM2.5. Therefore, reducing these emissions would also reduce 

human exposure to ambient PM2.5 and the incidence of PM2.5-related health effects. In this 

section, we provide an overview of the PM2.5-related benefits. A full description of the 

underlying data, studies, and assumptions is provided in the PM NAAQS RIA (U.S. EPA, 

2012a).

In implementing this rule, emission controls may lead to reductions in ambient PM2.5 

concentrations below the National Ambient Air Quality Standards (NAAQS) for PM in some 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-2

areas and assist other areas with attaining the PM NAAQS. Because the PM NAAQS RIA (U.S. 

EPA, 2012a) also calculated PM benefits, there are important differences worth noting in the 

design and analytical objectives of each RIA. The NAAQS RIAs illustrate the potential costs and 

benefits of attaining a revised air quality standard nationwide based on an array of emission 

reduction strategies for different sources including known and unknown controls, incremental to 

implementation of existing regulations and controls needed to attain the current standards. In 

short, NAAQS RIAs hypothesize, but do not predict, the reduction strategies that States may

choose to enact when implementing a revised NAAQS. The setting of a NAAQS does not 

directly result in costs or benefits, and as such, the NAAQS RIAs are merely illustrative and the 

estimated costs and benefits are not intended to be added to the costs and benefits of other 

regulations that result in specific costs of control and emission reductions. However, it is 

possible that some costs and benefits associated with the required emission controls estimated in 

this RIA may account for the same air quality improvements as estimated in the illustrative PM

NAAQS RIA. 

By contrast, the emission reductions for implementation rules such as this rulemaking are 

generally for specific, well-characterized sources. In general, EPA is more confident in the 

magnitude and location of the emission reductions for implementation rules. As such, emission 

reductions achieved under these and other promulgated implementation rules will ultimately be 

reflected in the baseline of future NAAQS analyses, which would reduce the incremental costs 

and benefits associated with attaining revised future NAAQS. EPA remains forward looking 

towards the next iteration of the 5-year review cycle for the NAAQS. As a result, EPA does not 

re-issue NAAQS RIAs that retroactively update the baseline to account for implementation rules 

promulgated after a NAAQS RIA outside of the NAAQS review process. For more information 

on the relationship between the NAAQS and rules that are not ambient standards, such as 

analyzed here, please see Section 1.3 of the PM NAAQS RIA (U.S. EPA, 2012a).

7.2.1 Health Impact Assessment

The Integrated Science Assessment for Particulate Matter (PM ISA) (U.S. EPA, 2009) 

identified the human health effects associated with ambient PM2.5, which include premature 

mortality and a variety of morbidity effects associated with acute and chronic exposures. Table 

7-1 provides the quantified and unquantified benefits captured in EPA’s benefits estimates for 

reduced exposure to ambient PM2.5. Although the table below does not include entries for the 

unquantified health effects such as exposure to ozone and NO2 nor welfare effects such as 

ecosystem effects and visibility impairment, these effects are itemized in Chapters 5 and 6 of the
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-3

Table 7-1. Human Health Effects of Ambient PM2.5

Category Specific Effect

Effect Has 

Been 

Quantified

Effect Has 

Been 

Monetized

More 

Information 

in PM 

NAAQS RIA

Improved Human Health

Reduced incidence of 

premature mortality 

from exposure to PM2.5

Adult premature mortality based on cohort 

study estimates and expert elicitation 

estimates (age >25 or age >30)

  Section 5.6

Infant mortality (age <1)   Section 5.6

Reduced incidence of 

morbidity from 

exposure to PM2.5

Non-fatal heart attacks (age > 18)   Section 5.6

Hospital admissions—respiratory (all ages)   Section 5.6

Hospital admissions—cardiovascular (age 

>20)

  Section 5.6

Emergency room visits for asthma (all 

ages)

  Section 5.6

Acute bronchitis (age 8–12)   Section 5.6

Lower respiratory symptoms (age 7–14)   Section 5.6

Upper respiratory symptoms (asthmatics

age 9–11)

  Section 5.6

Asthma exacerbation (asthmatics age 6–18)   Section 5.6

Lost work days (age 18–65)   Section 5.6

Minor restricted-activity days (age 18–65)   Section 5.6

Chronic Bronchitis (age >26) —a —aSection 5.6

Emergency room visits for cardiovascular 

effects (all ages)

—a —aSection 5.6

Strokes and cerebrovascular disease (age 

50–79)

—a —aSection 5.6

Other cardiovascular effects (e.g., other 

ages)

— — PM ISAb

Other respiratory effects (e.g., pulmonary 

function, non-asthma ER visits, nonbronchitis chronic diseases, other ages and 

populations)

— — PM ISAb

Reproductive and developmental effects 

(e.g., low birth weight, pre-term births, 

etc.)

— — PM ISAb,c

Cancer, mutagenicity, and genotoxicity 

effects

— — PM ISAb,c

a We assess these benefits qualitatively due to time and resource limitations for this analysis. In the PM NAAQS 

RIA, these benefits were quantified in a sensitivity analysis, but not in the core analysis.

b We assess these benefits qualitatively because we do not have sufficient confidence in available data or methods.

c We assess these benefits qualitatively because current evidence is only suggestive of causality or there are other 

significant concerns over the strength of the association.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-4

PM NAAQS RIA (U.S. EPA, 2012a). It is important to emphasize that the list of unquantified 

benefit categories is not exhaustive, nor is quantification of each effect complete.

We follow a “damage-function” approach in calculating benefits, which estimates 

changes in individual health endpoints (specific effects that can be associated with changes in air 

quality) and assigns values to those changes assuming independence of the values for those 

individual endpoints. Because EPA rarely has the time or resources to perform new research to 

measure directly either the health outcomes or their values for regulatory analyses, our estimates 

are based on the best available methods of benefits transfer, which is the science and art of 

adapting primary research from similar contexts to estimate benefits for the environmental 

quality change under analysis. 

The health impact assessment (HIA) quantifies the changes in the incidence of adverse 

health impacts resulting from changes in human exposure to PM2.5 or other air pollutants. We use 

the environmental Benefits Mapping and Analysis Program (BenMAP) to systematize health 

impact analyses by applying a database of key input parameters, including population 

projections, health impact functions, valuation functions (Abt Associates, 2012). For this 

assessment, the HIA is limited to those health effects that are directly linked to ambient PM2.5

concentrations. There may be other indirect health impacts associated with implementing 

emissions controls, such as occupational health exposures. Epidemiological studies generally 

provide estimates of the relative risks of a particular health effect for a given increment of air 

pollution (often per 10 μg/m3for PM2.5). These relative risks can be used to develop risk 

coefficients that relate a unit reduction in PM2.5 to changes in the incidence of a health effect. We 

refer the reader to section 5.6 of the PM NAAQS RIA for more information regarding the 

epidemiology studies and risk coefficients applied in this analysis (U.S. EPA, 2012a), and we 

briefly elaborate on adult premature mortality below. The size of the mortality effect estimates 

from epidemiological studies, the serious nature of the effect itself, and the high monetary value

ascribed to prolonging life make mortality risk reduction the most significant health endpoint 

quantified in this analysis.

Considering a substantial body of published scientific literature, reflecting thousands of 

epidemiology, toxicology, and clinical studies, the PM ISA documents the association between 

elevated PM2.5 concentrations and adverse health effects, including increased premature 

mortality (U.S. EPA, 2009). The PM ISA, which was twice reviewed by the Clean Air Scientific 

Advisory Committee of EPA’s Science Advisory Board (SAB-CASAC) (U.S. EPA-SAB, 2009b, 

2009c), concluded that there is a causal relationship between mortality and both long-term and 

short-term exposure to PM2.5 based on the entire body of scientific evidence. The PM ISA also 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-5

concluded that the scientific literature consistently finds that a no-threshold log-linear model 

most adequately portrays the PM-mortality concentration-response relationship while 

recognizing potential uncertainty about the exact shape of the concentration-response function. 

For mortality, we use the effect coefficients from the most recent epidemiology studies 

examining two large population cohorts: the American Cancer Society (ACS) cohort (Krewski et 

al., 2009) and the Harvard Six Cities cohort (Lepeule et al., 2012). The PM ISA (U.S. EPA, 

2009) concluded that the ACS and Six Cities cohorts provide the strongest evidence of the 

association between long-term PM2.5 exposure and premature mortality with support from a 

number of additional cohort studies. The SAB’s Health Effects Subcommittee (SAB-HES) also 

supported using these two cohorts for analyses of the benefits of PM reductions (U.S. EPA-SAB, 

2010a). As both the ACS and Six Cities cohort studies have inherent strengths and weaknesses, 

we present benefits estimates using relative risk estimates from both these cohorts (Krewski et 

al., 2009; Lepeule et al., 2012).

As a characterization of uncertainty regarding the PM2.5 -mortality relationship, EPA 

graphically presents benefits derived from EPA’s expert elicitation study (Roman et al., 2008; 

IEc, 2006). The primary goal of the 2006 study was to elicit from a sample of health experts 

probabilistic distributions describing uncertainty in estimates of the reduction in mortality among 

the adult U.S. population resulting from reductions in ambient annual average PM2.5 levels. In 

that study, twelve experts provided independent opinions of the PM2.5 -mortality concentrationresponse function. Because the experts relied upon the ACS and Six Cities cohort studies to 

inform their concentration-response functions, the benefits estimates derived from the expert 

responses generally fall between results derived from the these studies (see Figure 7-1). We do 

not combine the expert results in order to preserve the breadth and diversity of opinion on the 

expert panel. This presentation of the expert-derived results is generally consistent with SAB 

advice (U.S. EPA-SAB, 2008), which recommended that the EPA emphasize that “scientific 

differences existed only with respect to the magnitude of the effect of PM2.5 on mortality, not 

whether such an effect existed” and that the expert elicitation “supports the conclusion that the 

benefits of PM2.5 control are very likely to be substantial.” Although it is possible that newer 

scientific literature could revise the experts’ quantitative responses if elicited again, we believe 

that these general conclusions are unlikely to change.

7.2.2 Economic Valuation

After quantifying the change in adverse health impacts, we estimate the economic value 

of these avoided impacts. Reductions in ambient concentrations of air pollution generally lower 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-6

the risk of future adverse health effects by a small amount for a large population. Therefore, the 

appropriate economic measure is willingness to pay (WTP) for changes in risk of a health effect. 

For some health effects, such as hospital admissions, WTP estimates are generally not available, 

so we use the cost of treating or mitigating the effect. These cost-of-illness (COI) estimates 

generally (although not necessarily in every case) understate the true value of reductions in risk 

of a health effect. They tend to reflect the direct expenditures related to treatment but not the 

value of avoided pain and suffering from the health effect. The unit values applied in this 

analysis are provided in Table 5-9 of the PM NAAQS RIA for each health endpoint (U.S. EPA, 

2012a).

Avoided premature deaths account for 98% of monetized PM-related benefits. The 

economics literature concerning the appropriate method for valuing reductions in premature 

mortality risk is still developing. The adoption of a value for the projected reduction in the risk of 

premature mortality is the subject of continuing discussion within the economics and public

policy analysis community. Following the advice of the SAB’s Environmental Economics 

Advisory Committee (SAB-EEAC), the EPA currently uses the value of statistical life (VSL) 

approach in calculating estimates of mortality benefits, because we believe this calculation 

provides the most reasonable single estimate of an individual’s willingness to trade off money 

for reductions in mortality risk (U.S. EPA-SAB, 2000). The VSL approach is a summary

measure for the value of small changes in mortality risk experienced by a large number of 

people.

EPA continues work to update its guidance on valuing mortality risk reductions, and the 

Agency consulted several times with the SAB-EEAC on the issue. Until updated guidance is 

available, the Agency determined that a single, peer-reviewed estimate applied consistently best 

reflects the SAB-EEAC advice it has received. Therefore, EPA has decided to apply the VSL 

that was vetted and endorsed by the SAB in the Guidelines for Preparing Economic Analyses

(U.S. EPA, 2000)64 while the Agency continues its efforts to update its guidance on this issue. 

This approach calculates a mean value across VSL estimates derived from 26 labor market and 

contingent valuation studies published between 1974 and 1991. The mean VSL across these 

studies is $6.3 million (2000$).65

 

64 In the updated Guidelines for Preparing Economic Analyses (U.S. EPA, 2010e), EPA retained the VSL endorsed 

by the SAB with the understanding that further updates to the mortality risk valuation guidance would be 

forthcoming in the near future. 

65 In 1990$, this VSL is $4.8 million.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-7

We then adjust this VSL to account for the currency year used in this RIA and to account 

for income growth from 1990 to the analysis year. The adjusted value for VSL is $8.0 million 

($2010).

The Agency is committed to using scientifically sound, appropriately reviewed evidence 

in valuing mortality risk reductions and has made significant progress in responding to the SABEEAC’s specific recommendations. In the process, the Agency has identified a number of 

important issues to be considered in updating its mortality risk valuation estimates. These are 

detailed in a white paper on “Valuing Mortality Risk Reductions in Environmental Policy,” (U.S. 

EPA, 2010c) which recently underwent review by the SAB-EEAC. A meeting with the SAB on 

this paper was held on March 14, 2011 and formal recommendations were transmitted on 

July 29, 2011 (U.S. EPA-SAB, 2011). Draft guidance responding to SAB recommendations will 

be developed shortly.

In valuing premature mortality, we discount the value of premature mortality occurring in 

future years using rates of 3% and 7% (OMB, 2003). We assume that there is a “cessation” lag 

between changes in PM exposures and the total realization of changes in health effects. Although 

the structure of the lag is uncertain, the EPA follows the advice of the SAB-HES to assume a 

segmented lag structure characterized by 30% of mortality reductions in the first year, 50% over 

years 2 to 5, and 20% over the years 6 to 20 after the reduction in PM2.5 (U.S. EPA-SAB, 2004c). 

Changes in the cessation lag assumptions do not change the total number of estimated deaths but 

rather the timing of those deaths.

7.2.3 Benefit-per-ton Estimates

Due to analytical limitations, it was not possible to conduct air quality modeling for this 

rule. Instead, we used a “benefit-per-ton” approach to estimate the benefits of this rulemaking. 

EPA has applied this approach in several previous RIAs (e.g., U.S. EPA, 2011b, 2011d, 2012b). 

These benefit-per-ton estimates provide the total monetized human health benefits (the sum of 

premature mortality and premature morbidity) of reducing one ton of PM2.5 (or PM2.5 precursor 

such as NOx or SO2) from a specified source. Specifically, in this analysis, we multiplied the 

estimates from the “Residential Wood Heaters” sector66,67 by the corresponding emission 

reductions. The method used to derive these estimates is described in the Technical Support 

 

66 As explained in the TSD (U.S. EPA, 2013), we only have benefit-per-ton estimates for certain analysis years (i.e., 

2005, 2016, 2020, 2025, and 2030). For this RIA, we selected the benefit-per-ton estimate closest to the analysis 

year for this RIA. 

67 Data from year 2020 was used as the year closest to the full implementation year for both options analyzed in this 

RIA—2019 for the Proposal option, 2022 for the Alternative option. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-8

Document (TSD) on estimating the benefits-per-ton of reducing PM2.5 and its precursors (U.S. 

EPA, 2013). One limitation of using the benefit-per-ton approach is an inability to provide 

estimates of the health benefits associated with exposure to HAP, CO, NO2 or ozone.

The benefit-per-ton estimates described in the TSD (U.S. EPA, 2013) were derived using 

the approach published in Fann et al. (2012), but they have since been updated to reflect the 

studies and population data in the final PM NAAQS RIA (U.S. EPA, 2012a). The approach in 

Fann et al. (2012) is similar to the work previously published by Fann et al. (2009), but the 

newer study includes improvements that EPA believes would provide more reliable estimates of 

PM2.5-related health benefits for emissions reductions in specific sectors. Specifically, the air 

quality modeling data reflect sectors that are more narrowly defined. In addition, the updated air 

quality modeling data reflect more recent emissions data (2005 rather than 2001) and has higher 

spatial resolution (12km rather than 36 km grid cells). 

As noted below in the characterization of uncertainty, all benefit-per-ton estimates have 

inherent limitations. Specifically, all national-average benefit-per-ton estimates reflect the 

geographic distribution of the modeled emissions, which may not exactly match the emission 

reductions in this rulemaking, and they may not reflect local variability in population density, 

meteorology, exposure, baseline health incidence rates, or other local factors for any specific 

location. 

Even though we assume that all fine particles have equivalent health effects, the benefitper-ton estimates vary between precursors depending on the location and magnitude of their 

impact on PM2.5 levels, which drive population exposure. The sector-specific modeling does not 

provide estimates of the PM2.5-related benefits associated with reducing VOC emissions, but 

these unquantified benefits are generally small compared to other PM2.5 precursors (U.S. EPA, 

2012a).

7.2.4 PM2.5 Benefits Results

Table 7-2 summarizes the monetized PM-related health benefits by precursor pollutant, 

including the emission reductions and benefit-per-ton estimates using discount rates of 3% and 

7%. Benefits estimates are based on the average of annual emission reductions from proposed 

rule implementation between 2014 and 2022 (inclusive). Table 7-3 provides a summary of the 

reductions in health incidences associated with these pollution reductions. Figure 7-1 provides a 

visual representation of the range of PM2.5-related benefits estimates using concentrationresponse functions from Krewski et al. (2009) and Lepeule et al. (2012) as well as 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-9

Table 7-2. Summary of Monetized PM2.5-Related Health Benefits Estimates for the Proposed Residential Wood Heaters

NSPS in the 2014–2022 Time Frame (2010$)a

Pollutant

Emissions 

Reductions 

(tons)

Benefit per 

ton 

(Krewski, 

3%)

Benefit 

per ton 

(Lepeule, 

3%)

Benefit 

per ton 

(Krewski, 

7%)

Benefit 

per ton 

(Lepeule, 

7%)

Total Monetized 

Benefits (millions 2010$ 

at 3%)

Total Monetized 

Benefits (millions 2010$ 

at 7%)

Proposed

Direct PM2.5 4,825 $380,000 $860,000 $350,000 $780,000 $1,800 to $4,200 $1,700 to $3,700

PM2.5 Precursors

VOCb3,250 — — — — — to — — to —

Total $1,800 to $4,200 $1,700 to $3,800

Alternative

Direct PM2.5 4,878 $380000 $860,000 $350,000 $780,000 $1,900 to $4,200 $1,700 to $3,800

PM2.5 Precursors

VOCb3,250 — — — — — to — — to —

Total $1,900 to $4,200 $1,700 to $3,800

a All estimates reflect the average of annual emission reductions expected to occur between 2014 and 2022 (inclusive) resulting from proposed rule 

implementation. All estimates are rounded to two significant figures so numbers may not sum across columns. It is important to note that the monetized 

benefits do not include reduced health effects from direct exposure to NO2, ozone exposure, ecosystem effects, or visibility impairment. All fine particles are 

assumed to have equivalent health effects, but the benefit per ton estimates vary depending on the location and magnitude of their impact on PM2.5 levels, 

which drive population exposure. The monetized benefits incorporate the conversion from precursor emissions to ambient fine particles. Confidence intervals 

are unavailable for this analysis because of the benefit-per-ton methodology.

b Estimates of VOCs health benefits are currently not monetized and will be addressed only qualitatively.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-10

Table 7-3. Summary of Reductions in Health Incidences from PM2.5-Related Benefits for 

the Proposed Residential Wood Heaters NSPS in the 2014-2022 Time Framea

Avoided Premature Mortality Proposal Alternative

Krewski et al. (2009) (adult) 209 211

Lepeule et al. (2012) (adult) 472 477

Avoided Morbidity

Emergency department visits for asthma (all ages) 106 102

Acute bronchitis (age 8–12) 321 325

Lower respiratory symptoms (age 7–14) 4,108 4,153

Upper respiratory symptoms (asthmatics age 9–11) 5,930 5,995

Minor restricted-activity days (age 18–65) 165,238 167,047

Lost work days (age 18–65) 27,941 28,247

Asthma exacerbation (age 6–18) 14,533 14,692

Hospital admissions—respiratory (all ages) 54 54

Hospital admissions—cardiovascular (age > 18) 66 66

Non-Fatal Heart Attacks (age >18)

Peters et al. (2001) 226 228

Pooled estimate of 4 studies 25 25

a All estimates are rounded to whole numbers with two significant figures. Confidence intervals are unavailable for 

this analysis because of the benefit-per-ton methodology.

the 12 functions supplied by experts. Figure 7-2 provides a breakdown of monetized benefits by

Pollutant. In Table 7-4, we provide the benefits using our anchor points of Krewski et al., and 

Lepeule et al., as well as the results from the 12 experts’ elicitation on PM mortality.

7.2.5 Characterization of Uncertainty in the Monetized PM2.5 Benefits

In any complex analysis using estimated parameters and inputs from numerous models, 

there are likely to be many sources of uncertainty. This analysis is no exception. This analysis 

includes many data sources as inputs, including emission inventories, air quality data from 

models (with their associated parameters and inputs), population data, population estimates, 

health effect estimates from epidemiology studies, economic data for monetizing benefits, and 

assumptions regarding the future state of the world (i.e., regulations, technology, and human 

behavior). Each of these inputs may be uncertain and would affect the benefits estimate. When 

the uncertainties from each stage of the analysis are compounded, even small uncertainties can 

have large effects on the total quantified benefits. Therefore, the estimates of annual benefits 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-11

Figure 7-1. Total Monetized PM2.5 Benefits of the Proposed Residential Wood Heaters

NSPS in the 2014–2022 Time Framea

a This graph shows the estimated benefits at discount rates of 3% and 7% using effect coefficients derived from the 

Krewski et al. study and the Lepeule et al. study, as well as 12 effect coefficients derived from EPA’s expert 

elicitation on PM mortality. The results shown are not the direct results from the studies or expert elicitation; 

rather, the estimates are based in part on the concentration-response functions provided in those studies. 

Figure 7-2. Breakdown of Total Monetized PM2.5 Benefits of Proposed Residential Wood 

Heaters NSPS by Category

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Millions ($2010)

Benefits Estimates from 2 epidemiology functions and 12 Expert functions

Proposed Option

3% DR

7% DR

3%

16%

1%

54%

26%

Monetized Benefits by Category for the 

Proposed Option - Krewski at 3% 

Wood Stoves

Single Burn Rate Stoves

Pellet Stoves

Furnace: indoor, cordwood

Hydronic Heating Systems
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-12

Table 7-4. All PM2.5 Benefits Estimates for the Proposed Residential Wood Heaters NSPS 

at Discount Rates of 3% and 7% for the 2014 to 2022 Time Frame ($2010 

millions)a

Proposal Alternative

3% 7% 3% 7%

Benefit-per-ton Coefficients Derived from Epidemiology Literature

Krewski et al. $1,800 $1,700 $1,900 $1,700

Lepeule et al. $4,200 $3,700 $4,200 $3,800

Benefit-per-ton Coefficients Derived from Expert Elicitation

Expert A $4,800 $4,300 $4,800 $4,300

Expert B $3,800 $3,400 $3,900 $3,500

Expert C $3,800 $3,400 $3,800 $3,400

Expert D $2,700 $2,400 $2,700 $2,500

Expert E $6,100 $5,500 $6,200 $5,600

Expert F $3,500 $3,200 $3,600 $3,200

Expert G $2,200 $2,000 $2,200 $2,000

Expert H $2,800 $2,500 $2,800 $2,500

Expert I $3,700 $3,400 $2,800 $3,400

Expert J $3,000 $2,700 $3,000 $2,800

Expert K $440 $400 $450 $400

Expert L $2,500 $2,300 $2,500 $2,300

a All estimates are rounded to two significant figures. Estimates do not include confidence intervals because they 

were derived through the benefit-per-ton technique described above. The benefits estimates from the expert 

elicitation are provided as a reasonable characterization of the uncertainty in the mortality estimates associated 

with the concentration-response function. Confidence intervals are unavailable for this analysis because of the 

benefit-per-ton methodology. 

should be viewed as representative of the magnitude of benefits expected, rather than the actual 

benefits that would occur every year.

This RIA does not include the type of detailed uncertainty assessment found in the PM 

NAAQS RIA (U.S. EPA, 2012a) because we lack the necessary air quality input and monitoring 

data to run the benefits model. However, the results of the uncertainty analyses presented in the 

PM NAAQS RIA can provide some information regarding the uncertainty inherent in the 

benefits results presented in this analysis. Sensitivity analyses conducted for the PM NAAQS 

RIA indicate that alternate cessation lag assumptions could change the PM2.5-related mortality
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-13

benefits discounted at 3% by between 10% and –27% and that alternate income growth 

adjustments could change the PM2.5-related mortality benefits by between 33% and −14%.68

Unlike the PM NAAQS RIA, we do not have data on the specific location of the air 

quality changes associated with this rulemaking. As such, it is not feasible to estimate the 

proportion of benefits occurring in different locations, such as designated nonattainment areas. 

Instead, we applied benefit-per-ton estimates, which reflect specific geographic patterns of 

emissions reductions and specific air quality and benefits modeling assumptions. For example, 

these estimates do not reflect local variability in population density, meteorology, exposure, 

baseline health incidence rates, or other local factors that might lead to an over-estimate or 

under-estimate of the actual benefits of controlling PM precursors. Use of these $/ton values to 

estimate benefits may lead to higher or lower benefit estimates than if benefits were calculated 

based on direct air quality modeling. Great care should be taken in applying these estimates to 

emission reductions occurring in any specific location, as these are all based on national or broad 

regional emission reduction programs and therefore represent average benefits-per-ton over the 

entire United States. The benefits-per-ton for emission reductions in specific locations may be 

very different than the estimates presented here. To the extent that the geographic distributions of 

the emissions reductions for this rule are different than the modeled emissions, the benefits may

be underestimated or overestimated. In general, there is inherently more uncertainty for new 

sources, which may not be included in the emissions inventory, than existing sources. For more 

information, see the TSD describing the calculation of these benefit-per-ton estimates (U.S. EPA, 

2013).

Our estimate of the total benefits is based on EPA’s interpretation of the best available 

scientific literature and methods and supported by the SAB-HES and the NAS (NRC, 2002). 

Below are key assumptions underlying the estimates for premature mortality, which accounts for 

98% of the total monetized PM2.5 benefits: 

1. We assume that all fine particles, regardless of their chemical composition, are 

equally potent in causing premature mortality. This is an important assumption, 

because PM2.5 varies considerably in composition across sources, but the scientific 

evidence is not yet sufficient to allow differentiation of effect estimates by particle 

type. The PM ISA concluded that “many constituents of PM2.5 can be linked with 

multiple health effects, and the evidence is not yet sufficient to allow differentiation 

of those constituents or sources that are more closely related to specific outcomes”

(U.S. EPA, 2009).

 

68 http://www.epa.gov/ttn/ecas/regdata/RIAs/finalria.pdf (pp 6-16).
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-14

2. We assume that the health impact function for fine particles is log-linear without a 

threshold in this analysis. Thus, the estimates include health benefits from reducing 

fine particles in areas with varied concentrations of PM2.5, including both areas that 

do not meet the fine particle standard and those areas that are in attainment, down to 

the lowest modeled concentrations. 

3. We assume that there is a “cessation” lag between the change in PM exposures and 

the total realization of changes in mortality effects. Specifically, we assume that some 

of the incidences of premature mortality related to PM2.5 exposures occur in a 

distributed fashion over the 20 years following exposure based on the advice of the 

SAB-HES (U.S. EPA-SAB, 2004c), which affects the valuation of mortality benefits 

at different discount rates.

In general, we are more confident in the magnitude of the risks we estimate from 

simulated PM2.5 concentrations that coincide with the bulk of the observed PM concentrations in 

the epidemiological studies that are used to estimate the benefits. Likewise, we are less confident 

in the risk we estimate from simulated PM2.5 concentrations that fall below the bulk of the 

observed data in these studies. Concentration benchmark analyses (e.g., lowest measured level 

[LML] or one standard deviation below the mean of the air quality data in the study) allow 

readers to determine the portion of population exposed to annual mean PM2.5 levels at or above 

different concentrations, which provides some insight into the level of uncertainty in the 

estimated PM2.5 mortality benefits. There are uncertainties inherent in identifying any particular 

point at which our confidence in reported associations becomes appreciably less, and the 

scientific evidence provides no clear dividing line. However, the EPA does not view these 

concentration benchmarks as a concentration threshold below which we would not quantify

health benefits of air quality improvements.69 Rather, the benefits estimates reported in this RIA 

are the best estimates because they reflect the full range of air quality concentrations associated 

with the emission reduction strategies and because the current body of scientific literature 

indicates that a no-threshold model provides the best estimate of PM-related long-term mortality. 

In other words, although we may have less confidence in the magnitude of the risk at 

concentrations below these benchmarks, we still have high confidence that PM2.5 is causally

associated with risk at those lower air quality concentrations.

For this analysis, policy-specific air quality data is not available due to time or resource 

limitations. For these rules, we are unable to estimate the percentage of premature mortality 

associated with this specific rule’s emission reductions at each PM2.5 level. However, we believe 

 

69 For a summary of the scientific review statements regarding the lack of a threshold in the PM2.5-mortality 

relationship, see the Technical Support Document (TSD) entitled Summary of Expert Opinions on the Existence 

of a Threshold in the Concentration-Response Function for PM2.5-related Mortality (U.S. EPA, 2010b).
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-15

that it is still important to characterize the distribution of exposure to baseline air quality levels. 

As a surrogate measure of mortality impacts, we provide the percentage of the population 

exposed at each PM2.5 level in the baseline of the source apportionment modeling used to 

calculate the benefit-per-ton estimates for this sector. It is important to note that baseline 

exposure is only one parameter in the health impact function, along with baseline incidence rates 

population, and change in air quality. In other words, the percentage of the population exposed to 

air pollution below the LML is not the same as the percentage of the population experiencing 

health impacts as a result of a specific emission reduction policy. The most important aspect, 

which we are unable to quantify for rules without rule-specific air quality modeling, is the shift 

in exposure associated with this specific rule. Therefore, caution is warranted when interpreting 

the LML assessment for this rule because these results are not consistent with results from rules 

that had air quality modeling. 

Table 7-5 provides the percentage of the population exposed above and below two 

concentration benchmarks (i.e., LML and 1 standard deviation below the mean) in the modeled 

baseline. Figure 7-3 shows a bar chart of the percentage of the population exposed to various air 

quality levels in the baseline, and Figure 7-4 shows a cumulative distribution function of the 

same data. Both figures identify the LML for each of the major cohort studies. 

7.3 Unquantified Benefits

The monetized benefits estimated in this RIA only reflect a subset of benefits attributable 

to the health effect reductions associated with ambient fine particles. Data, time, and resource 

limitations prevented EPA from quantifying the impacts to, or monetizing the benefits from 

several important benefit categories, including benefits associated with the potential exposure to 

ozone formation due to VOC emissions as a precursor, VOC emissions as a PM2.5 precursor, 

Table 7-5. Population Exposure in the Baseline Above and Below Various Concentration 

Benchmarks in the Underlying Epidemiology Studiesa

Epidemiology 

Study

Below 1 Std. Dev.

Below AQ Mean

At or Above 1 Std. 

Dev. Below AQ Mean Below LML At or Above LML

Krewski et al. (2009) 89% 11% 7% 93%

Lepeule et al. (2012) N/A N/A 23% 67%

a One standard deviation below the mean is equivalent to the middle of the range between the 10th and 25th

percentile. For Krewski, the LML is 5.8 μg/m3and one standard deviation below the mean is 11.0 μg/m3. For 

Lepeule et al., the LML is 8 μg/m3and we do not have the data for one standard deviation below the mean. It is 

important to emphasize that although we have lower levels of confidence in levels below the LML for each study, 

the scientific evidence does not support the existence of a level below which health effects from exposure to PM2.5

do not occur.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-16

Among the populations exposed to PM2.5 in the baseline:

93% are exposed to PM2.5 levels at or above the LML of the Krewski et al. (2009) study

67% are exposed to PM2.5 levels at or above the LML of the Lepeule et al. (2012) study

Figure 7-3. Percentage of Adult Population by Annual Mean PM2.5 Exposure in the 

Baseline

HAP, CO exposure, as well as ecosystem effects, and visibility impairment due to the absence of 

air quality modeling data for these pollutants in this analysis. This does not imply that there are 

no benefits associated with these emission reductions. In this section, we provide a qualitative 

description of these benefits. 

7.3.1 HAP Benefits

Even though emissions of air toxics from all sources in the U.S. declined by

approximately 42% since 1990, the 2005 National-Scale Air Toxics Assessment (NATA) 

predicts that most Americans are exposed to ambient concentrations of air toxics at levels that 

have the potential to cause adverse health effects (U.S. EPA, 2011c).70 The levels of air toxics to 

 

70 The 2005 NATA is available on the Internet at http://www.epa.gov/ttn/atw/nata2005/.

0%

5%

10%

15%

20%

25%

<1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20

Percentage of PopulationExposed

Baseline Annual Mean PM2.5 Level (μg/m3)

LML of Lepeule et al. 

(2012) study

LML of Krewski et 

al. (2009) study
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-17

Among the populations exposed to PM2.5 in the baseline:

93% are exposed to PM2.5 levels at or above the LML of the Krewski et al. (2009) study

67% are exposed to PM2.5 levels at or above the LML of the Lepeule et al. (2012) study

Figure 7-4. Cumulative Distribution of Adult Population by Annual Mean PM2.5 

Exposure in the Baseline

which people are exposed vary depending on where people live and work and the kinds of 

activities in which they engage. In order to identify and prioritize air toxics, emission source 

types and locations that are of greatest potential concern, U.S. EPA conducts the NATA.71 The 

most recent NATA was conducted for calendar year 2005 and was released in March 2011. 

NATA includes four steps:

1. Compiling a national emissions inventory of air toxics emissions from outdoor 

sources

 

71 The NATA modeling framework has a number of limitations that prevent its use as the sole basis for setting 

regulatory standards. These limitations and uncertainties are discussed on the 2005 NATA website. Even so, this 

modeling framework is very useful in identifying air toxic pollutants and sources of greatest concern, setting 

regulatory priorities, and informing the decision making process. U.S. EPA.(2011). 2005 National-Scale Air 

Toxics Assessment. http://www.epa.gov/ttn/atw/nata2005/

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Cumulative percentage of populationexposed

Baseline Annual Mean PM2.5 Level (μg/m3)

LML of Krewski et 

al. (2009) study

LML of Lepeule et 

al. (2012) study
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-18

2. Estimating ambient and exposure concentrations of air toxics across the United States

3. Estimating population exposures across the United States

4. Characterizing potential public health risk due to inhalation of air toxics including 

both cancer and noncancer effects

Based on the 2005 NATA, EPA estimates that about 5% of census tracts nationwide have 

increased cancer risks greater than 100 in a million. The average national cancer risk is about 50 

in a million. Nationwide, the key pollutants that contribute most to the overall cancer risks are 

formaldehyde and benzene.72 Secondary formation (e.g., formaldehyde forming from other 

emitted pollutants) was the largest contributor to cancer risks, while stationary, mobile and 

background sources contribute almost equal portions of the remaining cancer risk.

Noncancer health effects can result from chronic,73 subchronic,74 or acute75 inhalation 

exposures to air toxics, and include neurological, cardiovascular, liver, kidney, and respiratory

effects as well as effects on the immune and reproductive systems. According to the 2005 

NATA, about three-fourths of the U.S. population was exposed to an average chronic 

concentration of air toxics that has the potential for adverse noncancer respiratory health effects. 

Results from the 2005 NATA indicate that acrolein is the primary driver for noncancer 

respiratory risk. 

Figures 7-5 and 7-6 depict the estimated census tract-level carcinogenic risk and 

noncancer respiratory hazard from the assessment. It is important to note that large reductions in 

HAP emissions may not necessarily translate into significant reductions in health risk because

toxicity varies by pollutant, and exposures may or may not exceed levels of concern. For 

example, acetaldehyde mass emissions are more than double acrolein emissions on a national 

basis, according to EPA’s 2005 National Emissions Inventory (NEI). However, the Integrated 

Risk Information System (IRIS) reference concentration (RfC) for acrolein is considerably lower 

 

72 Details about the overall confidence of certainty ranking of the individual pieces of NATA assessments including 

both quantitative (e.g., model-to-monitor ratios) and qualitative (e.g., quality of data, review of emission 

inventories) judgments can be found at http://www.epa.gov/ttn/atw/nata/roy/page16.html.

73 Chronic exposure is defined in the glossary of the Integrated Risk Information (IRIS) database 

(http://www.epa.gov/iris ) as repeated exposure by the oral, dermal, or inhalation route for more than 

approximately 10% of the life span in humans (more than approximately 90 days to 2 years in typically used 

laboratory animal species).

74 Defined in the IRIS database as repeated exposure by the oral, dermal, or inhalation route for more than 30 days, 

up to approximately 10% of the life span in humans (more than 30 days up to approximately 90 days in typically 

used laboratory animal species).

75 Defined in the IRIS database as exposure by the oral, dermal, or inhalation route for 24 hours or less.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-19

Figure 7-5. Estimated Census Tract Carcinogenic Risk from HAP Exposure from 

Outdoor Sources (2005 NATA)

than that for acetaldehyde, suggesting that acrolein could be potentially more toxic than 

acetaldehyde. Thus, it is important to account for the toxicity and exposure, as well as the mass 

of the targeted emissions. 

Due to methodology limitations, we were unable to estimate the benefits associated with 

the hazardous air pollutants that would be reduced as a result of these rules. In a few previous 

analyses of the benefits of reductions in HAP, EPA has quantified the benefits of potential 

reductions in the incidences of cancer and non-cancer risk (e.g., U.S. EPA, 1995). In those 

analyses, EPA relied on unit risk factors (URF) developed through risk assessment 

procedures.76These URFs are designed to be conservative, and as such, are more likely to 

 

76 The unit risk factor is a quantitative estimate of the carcinogenic potency of a pollutant, often expressed as the 

probability of contracting cancer from a 70-year lifetime continuous exposure to a concentration of one μg/m3of 

a pollutant.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-20

Figure 7-6. Estimated Chronic Census Tract Noncancer (Respiratory) Risk from HAP 

Exposure from Outdoor Sources (2005 NATA)

represent the high end of the distribution of risk rather than a best or most likely estimate of risk. 

As the purpose of a benefit analysis is to describe the benefits most likely to occur from a 

reduction in pollution, use of high-end, conservative risk estimates would overestimate the 

benefits of the regulation. While we used high-end risk estimates in past analyses, advice from 

the EPA’s Science Advisory Board (SAB) recommended that we avoid using high-end estimates 

in benefit analyses (U.S. EPA-SAB, 2002). Since this time, EPA has continued to develop better 

methods for analyzing the benefits of reductions in HAP.

As part of the second prospective analysis of the benefits and costs of the Clean Air Act 

(U.S. EPA, 2011a), EPA conducted a case study analysis of the health effects associated with 

reducing exposure to benzene in Houston from implementation of the Clean Air Act (IEc, 2009). 

While reviewing the draft report, EPA’s Advisory Council on Clean Air Compliance Analysis 

concluded that “the challenges for assessing progress in health improvement as a result of 

reductions in emissions of hazardous air pollutants (HAPs) are daunting...due to a lack of 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-21

exposure-response functions, uncertainties in emissions inventories and background levels, the 

difficulty of extrapolating risk estimates to low doses and the challenges of tracking health 

progress for diseases, such as cancer, that have long latency periods” (U.S. EPA-SAB, 2008).

In 2009, EPA convened a workshop to address the inherent complexities, limitations, and 

uncertainties in current methods to quantify the benefits of reducing HAP. Recommendations 

from this workshop included identifying research priorities, focusing on susceptible and 

vulnerable populations, and improving dose-response relationships (Gwinn et al., 2011). 

In summary, monetization of the benefits of reductions in cancer incidences requires 

several important inputs, including central estimates of cancer risks, estimates of exposure to 

carcinogenic HAP, and estimates of the value of an avoided case of cancer (fatal and non-fatal). 

Due to methodology limitations, we did not attempt to monetize the health benefits of reductions 

in HAP in this analysis. Instead, we provide a qualitative analysis of the health effects associated 

with the HAP anticipated to be reduced by these rules. EPA remains committed to improving 

methods for estimating HAP benefits by continuing to explore additional concepts of benefits, 

including changes in the distribution of risk. 

Below we describe the health effects associated with the HAPs that would be reduced by 

this rulemaking. 

7.3.1.1 Benzene

The EPA’s IRIS database lists benzene as a known human carcinogen (causing leukemia) 

by all routes of exposure, and concludes that exposure is associated with additional health effects, 

including genetic changes in both humans and animals and increased proliferation of bone marrow 

cells in mice.77,78,79 EPA states in its IRIS database that data indicate a causal relationship between 

benzene exposure and acute lymphocytic leukemia and suggest a relationship between benzene 

exposure and chronic non-lymphocytic leukemia and chronic lymphocytic leukemia. The IARC 

 

77 U.S. Environmental Protection Agency (U.S. EPA). 2000. Integrated Risk Information System File for Benzene. 

Research and Development, National Center for Environmental Assessment, Washington, DC. This material is 

available electronically at: http://www.epa.gov/iris/subst/0276.htm.

78 International Agency for Research on Cancer, IARC monographs on the evaluation of carcinogenic risk of 

chemicals to humans, Volume 29, Some industrial chemicals and dyestuffs, International Agency for Research 

on Cancer, World Health Organization, Lyon, France, p. 345-389, 1982. 

79 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, V.A. (1992) Synergistic action of the benzene metabolite 

hydroquinone on myelopoietic stimulating activity of granulocyte/macrophage colony-stimulating factor in vitro, 

Proc. Natl. Acad. Sci. 89:3691-3695.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-22

has determined that benzene is a human carcinogen and the DHHS has characterized benzene as a 

known human carcinogen.80,81

A number of adverse noncancer health effects including blood disorders, such as 

preleukemia and aplastic anemia, have also been associated with long-term exposure to 

benzene.82,83

7.3.1.2 Dioxins (Chlorinated dibenzodioxins (CDDs)

84

A number of effects have been observed in people exposed to 2,3,7,8-TCDD levels that 

are at least 10 times higher than background levels. The most obvious health effect in people 

exposure to relatively large amounts of 2,3,7,8-TCDD is Chloracne. Chloracne is a severe skin 

disease with acne-like lesions that occur mainly on the face and upper body. Other skin effects 

noted in people exposed to high doses of 2,3,7,8-TCDD include skin rashes, discoloration, and 

excessive body hair. Changes in blood and urine that may indicate liver damage also are seen in 

people. Alterations in the ability of the liver to metabolize (or breakdown) hemoglobin, lipids, 

sugar, and protein have been reported in people exposed to relatively high concentrations of 

2,3,7,8-TCDD. Most of the effects are considered mild and were reversible. However, in some 

people these effects may last for many years. Slight increases in the risk of diabetes and 

abnormal glucose tolerance have been observed in some studies of people exposed to 2,3,7,8-

TCDD. We do not have enough information to know if exposure to 2,3,7,8-TCDD would result 

in reproductive or developmental effects in people, but animal studies suggest that this is a 

potential health concern. 

In certain animal species, 2,3,7,8-TCDD is especially harmful and can cause death after a 

single exposure. Exposure to lower levels can cause a variety of effects in animals, such as 

weight loss, liver damage, and disruption of the endocrine system. In many species of animals, 

2,3,7,8-TCDD weakens the immune system and causes a decrease in the system’s ability to fight 

bacteria and viruses at relatively low levels (approximately 10 times higher than human 

 

80 International Agency for Research on Cancer (IARC). 1987. Monographs on the evaluation of carcinogenic risk 

of chemicals to humans, Volume 29, Supplement 7, Some industrial chemicals and dyestuffs, World Health 

Organization, Lyon, France.

81 U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcinogens 

available at: http://ntp.niehs.nih.gov/go/16183 .

82 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193-197.

83 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541-554.

84 All health effects language for this section came from: Agency for Toxic Substances and Disease Registry 

(ATSDR). 1999. ToxFAQs for Chlorinated Dibenzo-p-dioxins (CDDs) (CAS#: 2,3,7,8-TCDD 1746-01-6). 

Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. Available on the Internet at 

http://www.atsdr.cdc.gov/tfacts104.html.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-23

background body burdens). In other animal studies, exposure to 2,3,7,8-TCDD has caused 

reproductive damage and birth defects. Some animal species exposed to CDDs during pregnancy

had miscarriages and the offspring of animals exposed to 2,3,7,8-TCDD during pregnancy often 

had severe birth defects including skeletal deformities, kidney defects, and weakened immune 

responses. In some studies, effects were observed at body burdens 10 times higher than human 

background levels.

7.3.1.3 Formaldehyde

Since 1987, EPA has classified formaldehyde as a probable human carcinogen based on 

evidence in humans and in rats, mice, hamsters, and monkeys.85 Substantial additional research 

since that time informs current scientific understanding of the health effects associated with 

exposure to formaldehyde. These include recently published research conducted by the National 

Cancer Institute (NCI) which found an increased risk of nasopharyngeal cancer and 

lymphohematopoietic malignancies such as leukemia among workers exposed to 

formaldehyde.86,87 In an analysis of the lymphohematopoietic cancer mortality from an extended 

follow-up of these workers, NCI confirmed an association between lymphohematopoietic cancer 

risk and peak formaldehyde exposures.88 A recent NIOSH study of garment workers also found 

increased risk of death due to leukemia among workers exposed to formaldehyde.89 Extended 

follow-up of a cohort of British chemical workers did not find evidence of an increase in 

nasopharyngeal or lymphohematopoietic cancers, but a continuing statistically significant excess 

in lung cancers was reported.90

In the past 15 years there has been substantial research on the inhalation dosimetry for 

formaldehyde in rodents and primates by the Chemical Industry Institute of Toxicology (CIIT, 

now renamed the Hamner Institutes for Health Sciences), with a focus on use of rodent data for 

 

85 U.S. EPA. 1987. Assessment of Health Risks to Garment Workers and Certain Home Residents from Exposure to 

Formaldehyde, Office of Pesticides and Toxic Substances, April 1987. Docket EPA-HQ-OAR-2010-0162.

86 Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from lymphohematopoetic 

malignancies among workers in formaldehyde industries. Journal of the National Cancer Institute 95: 1615-1623. 

Docket EPA-HQ-OAR-2010-0162.

87 Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2004. Mortality from solid cancers among 

workers in formaldehyde industries. American Journal of Epidemiology 159: 1117-1130. Docket EPA-HQOAR-2010-0162.

88 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. 

Mortality from lymphohematopoietic malignancies among workers in formaldehyde industries: The National 

Cancer Institute cohort. J. National Cancer Inst. 101: 751-761. Docket EPA-HQ-OAR-2010-0162.

89 Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an update. Occup. 

Environ. Med. 61: 193-200. Docket EPA-HQ-OAR-2010-0162.

90 Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended follow-up of a cohort of British chemical workers 

exposed to formaldehyde. J National Cancer Inst. 95:1608-1615. Docket EPA-HQ-OAR-2010-0162.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-24

refinement of the quantitative cancer dose-response assessment.91,92,93 CIIT’s risk assessment of 

formaldehyde incorporated mechanistic and dosimetric information on formaldehyde. These data 

were modeled using a biologically-motivated two-stage clonal growth model for cancer and also 

a point of departure based on a Benchmark Dose approach. However, it should be noted that 

recent research published by EPA indicates that when two-stage modeling assumptions are 

varied, resulting dose-response estimates can vary by several orders of magnitude.94,95,96,97 These 

findings are not supportive of interpreting the CIIT model results as providing a conservative 

(health protective) estimate of human risk.98 EPA research also examined the contribution of the 

two-stage modeling for formaldehyde towards characterizing the relative weights of key events 

in the mode-of-action of a carcinogen. For example, the model-based inference in the published 

CIIT study that formaldehyde’s direct mutagenic action is not relevant to the compound’s 

tumorigenicity was found not to hold under variations of modeling assumptions.99

Based on the developments of the last decade, in 2004, the working group of the IARC 

concluded that formaldehyde is carcinogenic to humans (Group 1), on the basis of sufficient 

evidence in humans and sufficient evidence in experimental animals—a higher classification 

than previous IARC evaluations. After reviewing the currently available epidemiological 

evidence, the IARC (2006) characterized the human evidence for formaldehyde carcinogenicity 

 

91 Conolly, RB, JS Kimbell, D Janszen, PM Schlosser, D Kalisak, J Preston, and FJ Miller. 2003. Biologically 

motivated computational modeling of formaldehyde carcinogenicity in the F344 rat. Tox Sci 75: 432-447. 

Docket EPA-HQ-OAR-2010-0162.

92 Conolly, RB, JS Kimbell, D Janszen, PM Schlosser, D Kalisak, J Preston, and FJ Miller. 2004. Human respiratory 

tract cancer risks of inhaled formaldehyde: Dose-response predictions derived from biologically-motivated 

computational modeling of a combined rodent and human dataset. Tox Sci 82: 279-296. Docket EPA-HQ-OAR2010-0162.

93 Chemical Industry Institute of Toxicology (CIIT).1999. Formaldehyde: Hazard characterization and dose-response 

assessment for carcinogenicity by the route of inhalation. CIIT, September 28, 1999. Research Triangle Park, 

NC. Docket EPA-HQ-OAR-2010-0162.

94 U.S. EPA. Analysis of the Sensitivity and Uncertainty in 2-Stage Clonal Growth Models for Formaldehyde with 

Relevance to Other Biologically-Based Dose Response (BBDR) Models. U.S. Environmental Protection Agency, 

Washington, D.C., EPA/600/R-08/103, 2008. Docket EPA-HQ-OAR-2010-0162.

95 Subramaniam, R; Chen, C; Crump, K; et al. (2008) Uncertainties in biologically-based modeling of formaldehydeinduced cancer risk: identification of key issues. Risk Anal 28(4):907-923. Docket EPA-HQ-OAR-2010-0162.

96 Subramaniam RP; Crump KS; Van Landingham C; et al. (2007) Uncertainties in the CIIT model for 

formaldehyde-induced carcinogenicity in the rat: A limited sensitivity analysis–I. Risk Anal, 27: 1237–1254. 

Docket EPA-HQ-OAR-2010-0162.

97 Crump, K; Chen, C; Fox, J; et al. (2008) Sensitivity analysis of biologically motivated model for formaldehydeinduced respiratory cancer in humans. Ann Occup Hyg 52:481-495. Docket EPA-HQ-OAR-2010-0162.

98 Crump, K; Chen, C; Fox, J; et al. (2008) Sensitivity analysis of biologically motivated model for formaldehydeinduced respiratory cancer in humans. Ann Occup Hyg 52:481-495. Docket EPA-HQ-OAR-2010-0162.

99 Subramaniam RP; Crump KS; Van Landingham C; et al. (2007) Uncertainties in the CIIT model for 

formaldehyde-induced carcinogenicity in the rat: A limited sensitivity analysis–I. Risk Anal, 27: 1237–1254. 

Docket EPA-HQ-OAR-2010-0162.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-25

as “sufficient,” based upon the data on nasopharyngeal cancers; the epidemiologic evidence on 

leukemia was characterized as “strong.”

100

Formaldehyde exposure also causes a range of noncancer health effects, including 

irritation of the eyes (burning and watering of the eyes), nose and throat. Effects from repeated 

exposure in humans include respiratory tract irritation, chronic bronchitis and nasal epithelial 

lesions such as metaplasia and loss of cilia. Animal studies suggest that formaldehyde may also 

cause airway inflammation—including eosinophils infiltration into the airways. There are several 

studies that suggest that formaldehyde may increase the risk of asthma—particularly in the 

young.101,102

The above-mentioned rodent and human studies, as well as mechanistic information and 

their analyses, were evaluated in EPA’s recent Draft Toxicological Review of Formaldehyde—

Inhalation Assessment through the Integrated Risk Information System (IRIS) program. This 

draft IRIS assessment was released in June 2010 for public review and comment and external 

peer review by the National Research Council (NRC). The NRC released their review report in 

April 2011 (http://www.nap.edu/catalog.php?record_id=13142). The EPA is currently revising 

the draft assessment in response to this review.

7.3.1.4 Polycyclic Organic Matter (POM)

The term polycyclic organic matter (POM) defines a broad class of compounds that 

includes the polycyclic aromatic hydrocarbon compounds (PAHs). One of these compounds, 

naphthalene, is discussed separately below. POM compounds are formed primarily from 

combustion and are present in the atmosphere in gas and particulate form. Cancer is the major 

concern from exposure to POM. Epidemiologic studies have reported an increase in lung cancer 

in humans exposed to diesel exhaust, coke oven emissions, roofing tar emissions, and cigarette 

smoke; all of these mixtures contain POM compounds103,104. Animal studies have reported 

 

100 International Agency for Research on Cancer (2006) Formaldehyde, 2-Butoxyethanol and 1-tert-Butoxypropan-2-

ol. Monographs Volume 88. World Health Organization, Lyon, France. Docket EPA-HQ-OAR-2010-0162.

101 Agency for Toxic Substances and Disease Registry (ATSDR). 1999. Toxicological profile for Formaldehyde. 

Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. 

http://www.atsdr.cdc.gov/toxprofiles/tp111.html. Docket EPA-HQ-OAR-2010-0162.

102 WHO (2002) Concise International Chemical Assessment Document 40: Formaldehyde. Published under the 

joint sponsorship of the United Nations Environment Programme, the International Labour Organization, and the 

World Health Organization, and produced within the framework of the Inter-Organization Programme for the 

Sound Management of Chemicals. Geneva. Docket EPA-HQ-OAR-2010-0162.

103 Agency for Toxic Substances and Disease Registry (ATSDR). 1995. Toxicological profile for Polycyclic 

Aromatic Hydrocarbons (PAHs). Atlanta, GA: U.S. Department of Health and Human Services, Public Health 

Service. Available electronically at http://www.atsdr.cdc.gov/ToxProfiles/TP.asp?id=122&tid=25.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-26

respiratory tract tumors from inhalation exposure to benzo[a]pyrene and alimentary tract and 

liver tumors from oral exposure to benzo[a]pyrene. EPA has classified seven PAHs 

(benzo[a]pyrene, benz[a]anthracene, chrysene, benzo[b]fluoranthene, benzo[k]fluoranthene, 

dibenz[a,h]anthracene, and indeno[1,2,3-cd]pyrene) as Group B2, probable human 

carcinogens.105 Recent studies have found that maternal exposures to PAHs in a population of 

pregnant women were associated with several adverse birth outcomes, including low birth 

weight and reduced length at birth, as well as impaired cognitive development in preschool 

children (3 years of age).106,107 EPA has not yet evaluated these recent studies.

7.3.1.5 Other Air Toxics

In addition to the compounds described above, other compounds would be affected by 

this rule. Information regarding the health effects of these compounds can be found in EPA’s 

IRIS database.108

7.3.2 Carbon Monoxide Co-Benefits

Carbon monoxide in ambient air is formed primarily by the incomplete combustion of 

carbon-containing fuels and photochemical reactions in the atmosphere. The amount of CO 

emitted from these reactions, relative to carbon dioxide (CO2), is sensitive to conditions in the 

combustion zone, such as fuel oxygen content, burn temperature, or mixing time. Upon 

inhalation, CO diffuses through the respiratory system to the blood, which can cause hypoxia 

(reduced oxygen availability). Carbon monoxide can elicit a broad range of effects in multiple 

tissues and organ systems that are dependent upon concentration and duration of exposure. The 

Integrated Science Assessment for Carbon Monoxide (U.S. EPA, 2010a) concluded that shortterm exposure to CO is “likely to have a causal relationship” with cardiovascular morbidity, 

particularly in individuals with coronary heart disease. Epidemiologic studies associate shortterm CO exposure with increased risk of emergency department visits and hospital admissions. 

Coronary heart disease includes those who have angina pectoris (cardiac chest pain), as well as 

 

104 U.S. EPA (2002). Health Assessment Document for Diesel Engine Exhaust. EPA/600/8-90/057F Office of 

Research and Development, Washington DC. Retrieved on March 17, 2009 from 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060. Docket EPA-HQ-OAR-2010-0162.

105 U.S. EPA (1997). Integrated Risk Information System File of indeno(1,2,3-cd)pyrene. Research and 

Development, National Center for Environmental Assessment, Washington, DC. This material is available 

electronically at http://www.epa.gov/ncea/iris/subst/0457.htm.

106 Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect of transplacental exposure to environmental pollutants on 

birth outcomes in a multiethnic population. Environ Health Perspect. 111: 201-205.

107 Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, 

D.; Kinney, P. (2006) Effect of prenatal exposure to airborne polycyclic aromatic hydrocarbons on 

neurodevelopment in the first 3 years of life among inner-city children. Environ Health Perspect 114: 1287-1292.

108 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.epa.gov/iris.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-27

those who have experienced a heart attack. Other subpopulations potentially at risk include 

individuals with diseases such as chronic obstructive pulmonary disease (COPD), anemia, or 

diabetes, and individuals in very early or late life stages, such as older adults or the developing 

young. The evidence is suggestive of a causal relationship between short-term exposure to CO 

and respiratory morbidity and mortality. The evidence is also suggestive of a causal relationship 

for birth outcomes and developmental effects following long-term exposure to CO, and for 

central nervous system effects linked to short- and long-term exposure to CO.

7.3.3 Black Carbon (BC) Benefits

Incomplete combustion of wood results in emissions of fine and ultrafine particles, 

including black carbon (BC), brown carbon (BrC), and other nonlight, absorbing organic carbon 

(OC) particles. BC and BrC are collectively considered light, absorbing carbon (LAC) with BC 

referring to the most strongly light-absorbing form of carbon per unit mass. BC impacts the 

earth’s climate because of its high capacity for light absorption. The role of BC in key 

atmospheric processes links it to a range of climate impacts, including increased temperatures, 

accelerated ice and snow melt, and disruptions in precipitation patterns. A recent study by the 

UN Environment Programme (UNEP) concluded that reductions in BC and ozone will slow the 

rate of climate change within the first half of this century with a small number of targeted BC 

and ozone precursor emissions mitigation measures providing immediate protection for climate, 

public health, water and food security, and ecosystems (UNEP, 2011).109

While less effective in absorbing solar radiation than BC, BrC may contribute 

significantly to positive radiative forcing. At present the ability to quantify the climate impacts of 

BrC is limited. OC from incomplete combustion of wood (exclusive of BrC) is generally 

considered nonlight-absorbing carbon. Nonlight absorbing compounds scatter rather than absorb 

solar radiation and, therefore, provide a net direct cooling effect on climate. Thus, particles 

generated by residential wood combustion consist of components that are warming to the 

atmosphere (BC and BrC) and particles that are cooling (OC exclusive of BrC).

Residential wood combustion contributed about 380,000 tons of PM2.5 emissions across 

the United States in 2005. Of these PM2.5 emissions, approximately 21,000 tons are estimated to

 

109 UN Environment Programme, World Meteorological Organization. 2011, February. Integrated Assessment of 

Black Carbon and Tropospheric Ozone: Summary for Decision Makers. Available at 

http://www.unep.org/gc/gc26/download.asp?ID=2197.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-28

be elemental carbon (EC)110 (EPA NEI, 2005).111 

The EC/OC ratio is a metric sometimes used to crudely compare the warming potential of 

emissions from various BC sources with a ratio of less than 1 indicating that cooling potential 

exceeds warming. Based on the speciated 2005 NEI, the EC/OC for residential wood combustion 

is estimated to be less than one (~ 0.11), indicating a predominance of OC or light-scattering 

particles relative to light absorbing ones. Exactly how much of the OC from RWC sources is 

light absorbing (BrC) is not known currently, and the LAC may vary by fuel type, combustion 

conditions, and operating environment. 

While OC emissions are generally considered to have a cooling effect, OC emissions 

over areas with snow and ice may be less reflective than OC over dark surfaces and may even 

have a slight warming effect (Flanner et al., 2007).112 Significantly, the vast majority of 

residential wood smoke emissions occur during the winter months; the highest percentage of 

wood stove use is in the upper Midwest (e.g., Michigan), the Northeast (e.g., Maine), and the 

mountainous areas of the Pacific Northwest (e.g., Washington), where snow is present a good 

portion of the winter months. A recent study of the effect of soot-induced snow albedo on 

snowpack and hydrological cycles in the western United States concludes that radiative forcing 

induced by soot deposition on snow is an important anthropogenic source affecting the global 

climate. The study concludes that soot-induced snow albedo perturbations increase the surface 

net solar radiation flux during late winter to early spring, increase the surface air temperature, 

reduce the snow accumulation and spring snowmelt, and may alter stream flows with 

implications for water resources in the western United States (Qian, et al., 2009).113 Further study

is needed to better understand and quantify the impact of PM2.5 emissions and deposition from 

the RWC sector on climate.

 

110 BC is roughly equivalent to ‘soot carbon’ or the portion of soot that is closest to elemental carbon. The most 

commonly used measurement technique, the ‘thermal optical method’ quantifies the portion of PM that is EC.

EC is frequently used for emissions characterization and ambient measurements. The terms EC and BC are used 

interchangeably in this discussion.

111 U.S. EPA. 2005. National Emissions Inventory. 2005 Modeling Inventory. Available at. 

http://www.epa.gov/ttn/chief/emch/index.html. 

112 Flanner, M. G., Zender, C. S., Randerson, J. T., and Rasch, P. J. 2007. Present-day climate forcing and response 

from BC in snow. Journal of Geophysical Research-Atmospheres, 12(D11). doi:10.1029/2006JD008003

113 Qian, Y., W. I. Gustafson, L. R. Leung, and S. J. Ghan. 2009. Effects of soot-induced snow albedo change on 

snowpack and hydrological cycle in western United States based on Weather Research and Forecasting 

chemistry and regional climate simulations, J. Geophys. Res. 114, D03108. doi:10.1029/2008JD011039
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-29

7.3.4 VOCs as a PM2.5 Precursor

This rulemaking is expected to reduce emissions of VOCs, which are a precursor to 

PM2.5. Most VOCs emitted are oxidized to carbon dioxide (CO2) rather than to PM, but a portion 

of VOC emission contributes to ambient PM2.5 levels as organic carbon aerosols (U.S. EPA, 

2009c). Therefore, reducing these emissions would reduce PM2.5 formation, human exposure to 

PM2.5, and the incidence of PM2.5-related health effects. However, we have not quantified the 

PM2.5-related benefits associated with VOC reductions in this analysis. Analysis of organic 

carbon measurements suggest only a fraction of secondarily formed organic carbon aerosols are 

of anthropogenic origin. The current state of the science of secondary organic carbon aerosol 

formation indicates that anthropogenic VOC contribution to secondary organic carbon aerosol is 

often lower than the biogenic (natural) contribution. Given that a fraction of secondarily formed 

organic carbon aerosols is from anthropogenic VOC emissions and the extremely small amount 

of VOC emissions from this sector relative to the entire VOC inventory it is unlikely this sector 

has a large contribution to ambient secondary organic carbon aerosols. Photochemical models 

typically estimate secondary organic carbon from anthropogenic VOC emissions to be less than 

0.1 μg/m3. 

Due to limited resources, we were unable to perform air quality modeling for this rule. 

Therefore, given the high degree of variability in the responsiveness of PM2.5 formation to VOC 

emission reductions, we are unable to estimate the effect that reducing VOCs will have on 

ambient PM2.5 levels without air quality modeling.

7.3.5 VOCs as an Ozone Precursor

In the presence of sunlight, VOCs can undergo a chemical reaction in the atmosphere to 

form ozone. Reducing ambient ozone concentrations is associated with significant human health 

benefits, including mortality and respiratory morbidity (U.S. EPA, 2008a). Epidemiological 

researchers have associated ozone exposure with adverse health effects in numerous 

toxicological, clinical and epidemiological studies (U.S. EPA, 2006). These health effects 

include respiratory morbidity such as fewer asthma attacks, hospital and ER visits, school loss 

days, as well as premature mortality.

In addition to health impacts reduction, there are ecological benefits from reducing the 

formation of ozone and related exposure that leads to reduced net primary productivity and 

visible foliar injury which are associated with a range of ecosystems services.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-30

7.3.6 Visibility Impairment Co-Benefits

Reducing secondary formation of PM2.5 would improve visibility levels in the U.S. 

because suspended particles and gases degrade visibility by scattering and absorbing light (U.S. 

EPA, 2009). Fine particles with significant light-extinction efficiencies include sulfates, nitrates, 

organic carbon, elemental carbon, and soil (Sisler, 1996). Visibility has direct significance to 

people’s enjoyment of daily activities and their overall sense of wellbeing. Good visibility

increases the quality of life where individuals live and work, and where they engage in 

recreational activities. Particulate sulfate is the dominant source of regional haze in the eastern 

U.S. and particulate nitrate is an important contributor to light extinction in California and the 

upper Midwestern U.S., particularly during winter (U.S. EPA, 2009). Previous analyses (U.S. 

EPA, 2011a) show that visibility benefits can be a significant welfare benefit category. Without 

air quality modeling, we are not unable to estimate visibility related benefits, nor are we able to 

determine whether the emission reductions associated with this rule would be likely to have a 

significant impact on visibility in urban areas or Class I areas.

7.4 References

Abt Associates, Inc. 2012. BenMAP User’s Manual Appendices. Prepared for U.S. 

Environmental Protection Agency Office of Air Quality Planning and Standards. 

Research Triangle Park, NC. September. Available on the Internet at 

http://www.epa.gov/air/benmap/models/BenMAPAppendicesOct2012.pdf.

Fann, N., C.M. Fulcher, B.J. Hubbell. 2009. “The influence of location, source, and emission 

type in estimates of the human health benefits of reducing a ton of air pollution.” Air 

Qual Atmos Health 2:169–176.

Fann, N., K.R. Baker, and C.M. Fulcher. 2012. “Characterizing the PM2.5-related health benefits 

of emission reductions for 17 industrial, area and mobile emission sectors across the 

U.S.” Environment International 49 41–151. 

Gwinn, M.R., J. Craig, D.A. Axelrad, R. Cook, C. Dockins, N. Fann, R. Fegley, D.E. Guinnup, 

G. Helfand, B. Hubbell, S.L. Mazur, T. Palma, R.L. Smith, J. Vandenberg, and 

B. Sonawane. 2011. “Meeting report: Estimating the benefits of reducing hazardous air 

pollutants—summary of 2009 workshop and future considerations.” Environ Health 

Perspect. Jan; 119(1): p. 125-30.

Industrial Economics, Inc (IEc). 2009. Section 812 Prospective Study of the Benefits and Costs of 

the Clean Air Act: Air Toxics Case Study—Health Benefits of Benzene Reductions in 

Houston, 1990–2020. Final Report, July 14, 2009. Available on the Internet at 

http://www.epa.gov/air/sect812/dec09/812CAAA_Benzene_Houston_Final_Report_July

_2009.pdf.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-31

Industrial Economics, Incorporated (IEc). 2006. Expanded Expert Judgment Assessment of the 

Concentration-Response Relationship Between PM2.5 Exposure and Mortality. Prepared 

for: Office of Air Quality Planning and Standards, U.S. Environmental Protection 

Agency, Research Triangle Park, NC. September. Available on the Internet at 

http://www.epa.gov/ttn/ecas/regdata/Uncertainty/pm_ee_tsd_expert_interview_summarie

s.pdf.

Krewski D, Jerrett M, Burnett RT, Ma R, Hughes E, Shi, Y, et al. 2009. Extended follow-up and 

spatial analysis of the American Cancer Society study linking particulate air pollution 

and mortality. HEI Research Report, 140, Health Effects Institute, Boston, MA.

Lepeule J, Laden F, Dockery D, Schwartz J 2012. “Chronic Exposure to Fine Particles and 

Mortality: An Extended Follow-Up of the Harvard Six Cities Study from 1974 to 2009.”

Environ Health Perspect. Jul;120(7):965-70. 

National Research Council (NRC). 2002. Estimating the Public Health Benefits of Proposed Air 

Pollution Regulations. Washington, DC: The National Academies Press.

Office of Management and Budget (OMB). 2003. Circular A-4: Regulatory Analysis. 

Washington, DC. Available on the Internet at 

http://www.whitehouse.gov/omb/circulars/a004/a-4.html.

Roman, Henry A., Katherine D. Walker, Tyra L. Walsh, Lisa Conner, Harvey M. Richmond, 

Bryan J. Hubbell, and Patrick L. Kinney. 2008. “Expert Judgment Assessment of the 

Mortality Impact of Changes in Ambient Fine Particulate Matter in the U.S.” Environ. 

Sci. Technol., 42(7):2268-2274.

Sisler, J.F. 1996. Spatial and seasonal patterns and long-term variability of the composition of 

the haze in the United States: an analysis of data from the IMPROVE network. CIRA 

Report, ISSN 0737-5352-32, Colorado State University.

U.S. Census Bureau. 2008a. Firm Size Data from the Statistics of U.S. Businesses: U.S. Detail 

Employment Sizes: 2002. <http://www2.census.gov/csd/susb/2002/

02us_detailed%20sizes_6digitnaics.txt >

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2002. 

Workshop on the Benefits of Reductions in Exposure to Hazardous Air Pollutants: 

Developing Best Estimates of Dose-Response Functions An SAB Workshop Report of an 

EPA/SAB Workshop (Final Report). EPA-SAB-EC-WKSHP-02-001. January. Available 

on the Internet at 

http://yosemite.epa.gov/sab%5CSABPRODUCT.NSF/34355712EC011A358525719A00

5BF6F6/$File/ecwkshp02001%2Bappa-g.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 1995. Regulatory Impact Analysis for the 

Petroleum Refinery NESHAP. Revised Draft for Promulgation. Office of Air Quality 

Planning and Standards, Research Triangle Park, N.C. Available on the Internet at 

http://www.reg-markets.org/admin/authorpdfs/page.php?id=705.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-32

U.S. Environmental Protection Agency (U.S. EPA). 2006. Air Quality Criteria for Ozone and 

Related Photochemical Oxidants (Final). EPA/600/R-05/004aF-cF. Washington, DC: 

U.S. EPA. February. Available on the Internet at 

http://cfpub.epa.gov/ncea/CFM/recordisplay.cfm?deid=149923.

U.S. Environmental Protection Agency (U.S. EPA). 2008a. Integrated Science Assessment for 

Sulfur Oxides—Health Criteria (Final Report). National Center for Environmental 

Assessment, Research Triangle Park, NC. September. Available on the Internet at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843.

U.S. Environmental Protection Agency (U.S. EPA). 2008c. Integrated Science Assessment for 

Oxides of Nitrogen—Health Criteria (Final Report). National Center for Environmental 

Assessment, Research Triangle Park, NC. July. Available at at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645.

U.S. Environmental Protection Agency (U.S. EPA). 2008d. Integrated Science Assessment for 

Oxides of Nitrogen and Sulfur–Ecological Criteria National (Final Report). National 

Center for Environmental Assessment, Research Triangle Park, NC. EPA/600/R-08/139. 

December. Available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=201485.

U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for 

Particulate Matter (Final Report). EPA-600-R-08-139F. National Center for 

Environmental Assessment—RTP Division. December. Available on the Internet at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546.

U.S. Environmental Protection Agency (U.S. EPA). 2010a. Integrated Science Assessment for 

Carbon Monoxide. National Center for Environmental Assessment, Research Triangle 

Park, NC. EPA/600/R-09/019F. January. Available at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686.

U.S. Environmental Protection Agency (U.S. EPA). 2010b. Technical Support Document: 

Summary of Expert Opinions on the Existence of a Threshold in the ConcentrationResponse Function for PM2.5-related Mortality. Research Triangle Park, NC. June. 

Available on the Internet at www.epa.gov/ttn/ecas/regdata/Benefits/thresholdstsd.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2010c. Valuing Mortality Risk Reductions 

for Environmental Policy: A White Paper: SAB Review Draft. National Center for 

Environmental Economics December. Available on the Internet at 

http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-0563-1.pdf/$file/EE-0563-1.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2010e. Guidelines for Preparing Economic 

Analyses. EPA 240-R-10-001. National Center for Environmental Economics, Office of 

Policy Economics and Innovation. Washington, DC. December. Available on the Internet 

at http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-0568-50.pdf/$file/EE-0568- 50.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2011a. The Benefits and Costs of the Clean 

Air Act from 1990 to 2020. Office of Air and Radiation, Washington, DC. March. 

http://www.epa.gov/air/sect812/feb11/fullreport.pdf. Accessed March 30, 2011.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-33

U.S. Environmental Protection Agency (U.S. EPA). 2011b. Regulatory Impact Analysis for the 

Final Mercury and Air Toxics Standards. EPA-452/R-11-011. December. Available on 

the Internet at http://www.epa.gov/ttn/ecas/regdata/RIAs/matsriafinal.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2011c. 2005 National-Scale Air Toxics 

Assessment. Office of Air Quality Planning and Standards, Research Triangle Park, NC. 

March. Available on the Internet at http://www.epa.gov/ttn/atw/nata2005/.

U.S. Environmental Protection Agency (U.S. EPA). 2011d. Regulatory Impact Analysis: 

National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, 

and Institutional Boilers and Process Heaters. February. Available on the Internet at 

http://www.epa.gov/ttnecas1/regdata/RIAs/boilersriafinal110221_psg.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2012a. Regulatory Impact Analysis for the 

Final Revisions to the National Ambient Air Quality Standards for Particulate Matter. 

EPA-452/R-12-003. Office of Air Quality Planning and Standards, Health and 

Environmental Impacts Division. December. Available at 

http://www.epa.gov/pm/2012/finalria.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2012b. Regulatory Impact Analysis: 

Petroleum Refineries New Source Performance Standards Ja. Office of Air Quality

Planning and Standards, Health and Environmental Impacts Division. June. Available at 

http://www.epa.gov/ttnecas1/regdata/RIAs/refineries_nsps_ja_final_ria.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2013. Technical Support Document: 

Estimating the Benefit per ton of Reducing PM2.5 Precursors from 17 sectors. Office of 

Air Quality Planning and Standards, Research Triangle Park, NC. February.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2008. 

Characterizing Uncertainty in Particulate Matter Benefits Using Expert Elicitation. 

EPA-COUNCIL-08-002. July. Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/0/43B91173651AED9E85257487004EA6CB/

$File/EPA-COUNCIL-08-002-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2000. An 

SAB Report on EPA’s White Paper Valuing the Benefits of Fatal Cancer Risk Reduction.

EPA-SAB-EEAC-00-013. July. Available on the Internet at 

http://yosemite.epa.gov/sab%5CSABPRODUCT.NSF/41334524148BCCD6852571A700

516498/$File/eeacf013.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2004c.

Advisory Council on Clean Air Compliance Analysis Response to Agency Request on 

Cessation Lag. EPA-COUNCIL-LTR-05-001. December. Available on the Internet at <.

http://yosemite.epa.gov/sab/sabproduct.nsf/0/39F44B098DB49F3C85257170005293E0/$

File/council_ltr_05_001.pdf
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

7-34

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2008. 

Benefits of Reducing Benzene Emissions in Houston, 1990–2020. EPA-COUNCIL-08-

001. July. Available at 

http://yosemite.epa.gov/sab/sabproduct.nsf/D4D7EC9DAEDA8A548525748600728A83/

$File/EPA-COUNCIL-08-001-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2009b. 

Review of EPA’s Integrated Science Assessment for Particulate Matter (First External 

Review Draft, December 2008). EPA-COUNCIL-09-008. May. Available on the Internet 

at 

http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86e/

73ACCA834AB44A10852575BD0064346B/$File/EPA-CASAC-09-008-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2009c. 

Review of Integrated Science Assessment for Particulate Matter (Second External Review 

Draft, July 2009). EPA-CASAC-10-001. November. Available on the Internet at 

http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86e/

151B1F83B023145585257678006836B9/$File/EPA-CASAC-10-001-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2010a. 

Review of EPA’s DRAFT Health Benefits of the Second Section 812 Prospective Study of 

the Clean Air Act. EPA-COUNCIL-10-001. June. Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/9288428b8eeea4c885257242006935a3/59e06

b6c5ca66597852575e7006c5d09!OpenDocument&TableRow=2.3#2.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2011. 

Review of Valuing Mortality Risk Reductions for Environmental Policy: A White Paper 

(December 10, 2010). EPA-SAB-11-011 July. Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/298E1F50F844BC23852578DC0059A616/$F

ile/EPA-SAB-11-011-unsigned.pdf .
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-1

SECTION 8

COMPARISON OF MONETIZED BENEFITS AND COSTS

8.1 Summary

Because we are unable to monetize the co-benefits associated with reducing other 

pollutants such as VOCs and CO, all monetized benefits reflect improvements in ambient PM2.5 

concentrations. This results in an underestimate of the monetized benefits. Using a 3% discount 

rate, we estimate the total monetized benefits of this proposed rule to be $1.8 billion to $4.2

billion in the 2014–2022 time frame (Table 8-1). We estimate the impacts for the time frame 

from 2014 to 2022 in order to provide an average of annualized results for these options from the 

time of rule promulgation in 2014 to the time of full implementation of both options, which 

occurs by 2022. The variability of annual impacts for each option provides an appropriate 

rationale for presenting impacts averaged over this time frame. Using a 7% discount rate, we 

estimate the total monetized benefits to be $1.7 billion to $3.8 billion in the 2014–2022 time 

frame. For the Alternative option, using a 3% discount rate, we estimate the total monetized 

benefits of this proposed rule to be $1.9 billion to $4.2 billion in the 2014–2022 time frame

(Table 8-1). Using a 7% discount rate, we estimate the total monetized benefits under the 

Alternative option to be $1.7 billion to $3.8 billion in the 2014–2022 time frame. The 

annualized social costs are $15.7 million for the Proposed rule and $28.3 million for the 

Alternative option in the 2014–2022 time frame (2010 dollars), and are $14.8 million for the 

proposed rule and $26.9 million for the Alternative option, respectively, in the same time frame

using a 3% interest rate. The net benefits (benefits – costs) are therefore $1.8 billion to $4.1

billion at a 3% discount rate for the benefits and $1.7 billion to $3.7 billion at a 7% discount rate

for the Proposed option and $1.8 billion to $4.2 Billion at a 3% discount rate and $1.7 billion to 

$3.8 billion at a 7% discount rate for the Alternative option in the 2014–2022 time frame. The 

net benefits with annualized social costs at a 3% interest rate are essentially identical to those 

shown above with costs at a 7% interest rate. Annual benefits were equal through all options 

thereafter. All estimates are in 2010$. The benefits from reducing other air pollutants have not 

been monetized in this analysis, including reducing nearly 3,200 tons of VOC, nearly 33,000 

tons of CO, black carbon and several HAPs emissions such as formaldehyde and benzene among 

others each year. 

Figure 8-1 shows the full range of net benefits estimates (i.e., annual benefits minus 

annualized costs) quantified in terms of PM2.5 benefits reflecting the average annual impact for 

the 2014–2022 time frame of the analysis under the Proposed option, and Figure 8-2 shows the 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-2

full range of net benefits estimates for the Alternative option. The net benefits reflect a 3% 

discount rate for the benefits. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-3

Table 8-1. Summary of the Monetized Benefits, Social Costs, and Net Benefits for the 

Proposed Residential Wood Heater NSPS in the 2014–2022 Time Frame 

($2010 millions)

a

Proposed Option 3% Discount Rate 7% Discount Rate

Total Monetized Benefitsb$1,800 to $4,200 $1,700 to $3,800

Total Social Costsc$15 $16

Net Benefits $1,800 to $4,100 $1,700 To $3,700

Nonmonetized Benefits 32,600 tons of CO

3,200 tons of VOC

Reduced exposure to HAPs, including formaldehyde, benzene, and polycyclic 

organic matter

Reduced Climate effects due to reductions in black carbon emissions

Reduced ecosystem effects 

Reduced visibility impairment 

Alternative Option

Total Monetized Benefitsb$1,900 to $4,200 $1,700 To $3,800

Total Social Costsc$27 $28

Net Benefits $1,800 to $4,200 $1,700 to $3,800

Nonmonetized Benefits 32,900 tons of CO

3,200 tons of VOC

Reduced exposure to HAPs, including formaldehyde, benzene, and polycyclic 

organic matter

Reduced Climate effects due to reductions in black carbon emissions

Reduced ecosystem effects 

Reduced visibility impairment 

a All estimates are for the time frame from 2014 to 2022 inclusive and are rounded to two significant figures. These 

results include units anticipated to come online and the lowest cost disposal assumption. Total annualized social 

costs are estimated at a 7% interest rate. 

b The total monetized benefits reflect the human health benefits associated with reducing exposure to PM2.5 through 

reductions of directly emitted PM2.5. It is important to note that the monetized benefits include many but not all 

health effects associated with PM2.5 exposure. Benefits are shown as a range from Krewski et al. (2009) to 

Lepeule et al. (2012). These models assume that all fine particles, regardless of their chemical composition, are 

equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow

differentiation of effect estimates by particle type. Because these estimates were generated using benefit-per-ton 

estimates, we do not break down the total monetized benefits into specific components here. See Figure 7-1 in this 

RIA for an illustration of the breakdown, or the RIA for the final Cross-States Air Pollution Rule (EPA, 2011) for 

more information. 

c The annualized social costs are $14.8 million for the Proposed Option and $26.9 million for the Alternative 

Option at a 3% interest rate. We assume that annual compliance costs serve as an approximation of the social 

costs of the proposal.
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-4

Figure 8-1. Net Annual Benefits Range in 2014–2022 Time Frame for PM2.5 Reductions 

for the Proposed Option

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

Krewski et al.

Lepeule et al.

D

ollars (2010$)

Cost estimate (at 7% interest rate) combined with total monetized benefits 

estimates derived from 2 epidemiology functions and 12 expert functions
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-5

Figure 8-2. Net Annual Benefits Range in 2014–2022 Time Frame for PM2.5 Reductions 

for the Alternative Option

Table 8-2 provides estimates of annualized costs and benefits for each affected source 

category for the Proposed option, and Table 8-3 provides estimates of annualized costs and 

benefits for each affected category for the Alternative option. 

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

Krewski et al.

Lepeule et al.

D

ollars (2010$)

Cost estimate (at 7% interest rate) combined with total monetized benefits 

estimates derived from 2 epidemiology functions and 12 expert functions
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-6

Table 8-2. Compliance Costs, Monetized Benefits, and Monetized Net Benefits (2010 

dollars) by Source Category in the 2014–2022 Time Frame—Proposal Option

Source Category

Total Annualized 

Costs

($ millions)

Monetized Benefits

($ millions)a

Monetized Net 

Benefits ($ millions)

Wood stoves $4.2 $62 to $140 $62 to $140

Single burn rate stoves $0.9 $290 to $650 $290 to $650

Pellet stoves $3.5 $19 to $43 $19 to $43

Forced-air furnaces $2.3 $1,000 to $2,200 $1,000 to $2,200

Masonry heaters $0.3 N/A N/A

Hydronic heating systems $4.5 $480 to $1,100 $480 to $1,100

a All estimates are for the time frame from 2014 to 2022 inclusive. These results include units anticipated to come 

online and the lowest cost disposal assumption. Total annualized costs are estimated at a 7% interest rate. 

b Total monetized benefits are estimated at a 3% discount rate. The total monetized benefits reflect the human 

health benefits associated with reducing exposure to PM2.5 through reductions of directly emitted PM2.5. It is 

important to note that the monetized benefits include many but not all health effects associated with PM2.5

exposure. Benefits are shown as a range from Krewski et al. (2009) to Lepeule et al. (2012). These models assume 

that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality 

because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. 

Because these estimates were generated using benefit-per-ton estimates, we do not break down the total 

monetized benefits into specific components here. See Figure7-1 in this RIA for an illustration of the breakdown, 

or the RIA for the final Cross-States Air Pollution Rule (EPA, 2011) for more information. 
*** E.O. 12866 Review - Draft – Do Not Cite, Quote or Release During Review ***

8-7

Table 8-3. Compliance Costs, Monetized Benefits, and Monetized Net Benefits (2010 

dollars) by Source Category in the 2014–2022 Time Frame—Alternative 

Option

Source Category

Total Annualized 

Costs

($ millions)a

Monetized Benefits

($ millions)a

Monetized Net 

Benefits 

($millions)a

Wood stoves $8.1 $ $52 to $120 $ $40 to $110

Single burn rate stoves $1.5 $$290 to $650 $$290 to $650

Pellet stoves $6.2 $ $3 to $15 $ $3 to $15

Forced-air furnaces $3.8 $ $1,000 to $2,300 $ $1,000 to $2,300

Masonry heaters $0.3 N/A N/A

Hydronic heating systems $8.3 $ $470 to $1,100 $ $470 to $1,100

a All estimates are for the time frame from 2014 to 2022 inclusive. These results include units anticipated to come 

online and the lowest cost disposal assumption. Total annualized costs are estimated at a 7% interest rate. 

b Total monetized benefits are estimated at a 3% discount rate. The total monetized benefits reflect the human 

health benefits associated with reducing exposure to PM2.5 through reductions of directly emitted PM2.5. It is 

important to note that the monetized benefits include many but not all health effects associated with PM2.5

exposure. Benefits are shown as a range from Krewski et al. (2009) to Lepeule et al. (2012). These models assume 

that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality 

because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. 

Because these estimates were generated using benefit-per-ton estimates, we do not break down the total 

monetized benefits into specific components here. See Figure7-1 in this RIA for an illustration of the breakdown, 

or the RIA for the final Cross-States Air Pollution Rule (EPA, 2011) for more information. 
9-1

SECTION 9

REFERENCES AND COST APPENDIX

Abt Associates, Inc. 2012. BenMAP User’s Manual Appendices. Prepared for U.S. Environmental Protection 

Agency Office of Air Quality Planning and Standards. Research Triangle Park, NC. September. 

Available on the Internet at http://www.epa.gov/air/benmap/models/BenMAPAppendicesOct2012.pdf.

Agency for Toxic Substances and Disease Registry (ATSDR). 1995. Toxicological Profile for Polycyclic 

Aromatic Hydrocarbons (PAHs). Atlanta, GA: U.S. Department of Health and Human Services, Public 

Health Service. Available at: http://www.atsdr.cdc.gov/ToxProfiles/TP.asp?id=122&tid=25

American Enterprise Institute (AEI) and Brookings Institution Joint Center for Regulatory Studies. 1986. NSPS 

for Residential Wood Heaters. Regulatory Impact Analysis. RIN: 2060-AB68. Available at: http://regmarkets.org/admin/authorpdfs/redirect-safely.php?fname=../pdffiles/2060-AB68.RIA.pdf

Bernstein, M.A., and J. Griffin. 2005. Regional Differences in the Price-Elasticity of Demand for Energy. The 

RAND Corporation. Available at: http://www.rand.org/pubs/technical_reports/2005/RAND_TR292.pdf.

Chernov, A. 2008. Masonry Heaters: Planning Guide for Architects, Home Designers, and builders. 

Stovemaster Web site. Available at: http://www.stovemaster.com/files/masonry.pdf. 

Dagan, D. January 7, 2005. “Warming Up to Stoves.” Central Penn Business Journal. Available at: 

http://www.allbusiness.com/sales/1033217-1.html

Dun & Bradstreet (D&B). 2010. D&B Marketplace. A company information database searchable by NAICS 

code. Accessed on July 15, 2010.

Fann, N., C.M. Fulcher, B.J. Hubbell. 2009. “The influence of location, source, and emission type in estimates 

of the human health benefits of reducing a ton of air pollution.” Air Qual Atmos Health 2:169–176.

Fann, N., K.R. Baker, and C.M. Fulcher. 2012. “Characterizing the PM2.5-related health benefits of emission 

reductions for 17 industrial, area and mobile emission sectors across the U.S.” Environment 

International 49 41–151. 

Gwinn, M.R., J. Craig, D.A. Axelrad, R. Cook, C. Dockins, N. Fann, R. Fegley, D.E. Guinnup, G. Helfand, B. 

Hubbell, S.L. Mazur, T. Palma, R.L. Smith, J. Vandenberg, and B. Sonawane. 2011. “Meeting report: 

Estimating the benefits of reducing hazardous air pollutants—summary of 2009 workshop and future 

considerations.” Environ Health Perspect. Jan; 119(1): p. 125-30.

Industrial Economics, Inc (IEc). 2009. Section 812 Prospective Study of the Benefits and Costs of the Clean Air 

Act: Air Toxics Case Study—Health Benefits of Benzene Reductions in Houston, 1990–2020. Final 

Report, July 14, 2009. Available on the Internet at 

http://www.epa.gov/air/sect812/dec09/812CAAA_Benzene_Houston_Final_Report_July_2009.pdf.

Industrial Economics, Incorporated (IEc). 2006. Expanded Expert Judgment Assessment of the ConcentrationResponse Relationship Between PM2.5 Exposure and Mortality. Prepared for: Office of Air Quality

Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, NC.

September. Available on the Internet at 

http://www.epa.gov/ttn/ecas/regdata/Uncertainty/pm_ee_tsd_expert_interview_summaries.pdf.
9-2

Krewski D, Jerrett M, Burnett RT, Ma R, Hughes E, Shi, Y, et al. 2009. Extended follow-up and spatial analysis 

of the American Cancer Society study linking particulate air pollution and mortality. HEI Research 

Report, 140, Health Effects Institute, Boston, MA.

Lepeule J, Laden F, Dockery D, Schwartz J 2012. “Chronic Exposure to Fine Particles and Mortality: An 

Extended Follow-Up of the Harvard Six Cities Study from 1974 to 2009.” Environ Health Perspect. 

Jul;120(7):965-70.

National Research Council (NRC). 2002. Estimating the Public Health Benefits of Proposed Air Pollution 

Regulations. Washington, DC: The National Academies Press.

Office of Management and Budget (OMB). 2003. Circular A-4: Regulatory Analysis. Washington, DC. 

Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a-4.html.

Roman, Henry A., Katherine D. Walker, Tyra L. Walsh, Lisa Conner, Harvey M. Richmond, Bryan J. Hubbell, 

and Patrick L. Kinney. 2008. “Expert Judgment Assessment of the Mortality Impact of Changes in 

Ambient Fine Particulate Matter in the U.S.” Environ. Sci. Technol., 42(7):2268-2274.

Sisler, J.F. 1996. Spatial and seasonal patterns and long-term variability of the composition of the haze in the 

United States: an analysis of data from the IMPROVE network. CIRA Report, ISSN 0737-5352-32, 

Colorado State University.

U.S. Census Bureau. 2008a. Firm Size Data from the Statistics of U.S. Businesses: U.S. Detail Employment 

Sizes: 2002. <http://www2.census.gov/csd/susb/2002/ 02us_detailed%20sizes_6digitnaics.txt >

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2002. Workshop on the 

Benefits of Reductions in Exposure to Hazardous Air Pollutants: Developing Best Estimates of DoseResponse Functions An SAB Workshop Report of an EPA/SAB Workshop (Final Report). EPA-SAB-ECWKSHP-02-001. January. Available on the Internet at 

http://yosemite.epa.gov/sab%5CSABPRODUCT.NSF/34355712EC011A358525719A005BF6F6/$File/

ecwkshp02001%2Bappa-g.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 1995. Regulatory Impact Analysis for the Petroleum 

Refinery NESHAP. Revised Draft for Promulgation. Office of Air Quality Planning and Standards, 

Research Triangle Park, N.C. Available on the Internet at http://www.regmarkets.org/admin/authorpdfs/page.php?id=705.

U.S. Environmental Protection Agency (U.S. EPA). 2006. Air Quality Criteria for Ozone and Related 

Photochemical Oxidants (Final). EPA/600/R-05/004aF-cF. Washington, DC: U.S. EPA. February. 

Available on the Internet at http://cfpub.epa.gov/ncea/CFM/recordisplay.cfm?deid=149923.

U.S. Environmental Protection Agency (U.S. EPA). 2008a. Integrated Science Assessment for Sulfur Oxides—

Health Criteria (Final Report). National Center for Environmental Assessment, Research Triangle Park, 

NC. September. Available on the Internet at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843.

U.S. Environmental Protection Agency (U.S. EPA). 2008c. Integrated Science Assessment for Oxides of 

Nitrogen—Health Criteria (Final Report). National Center for Environmental Assessment, Research 

Triangle Park, NC. July. Available at at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645.
9-3

U.S. Environmental Protection Agency (U.S. EPA). 2008d. Integrated Science Assessment for Oxides of 

Nitrogen and Sulfur–Ecological Criteria National (Final Report). National Center for Environmental 

Assessment, Research Triangle Park, NC. EPA/600/R-08/139. December. Available at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=201485.

U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for Particulate Matter 

(Final Report). EPA-600-R-08-139F. National Center for Environmental Assessment—RTP Division. 

December. Available on the Internet at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546.

U.S. Environmental Protection Agency (U.S. EPA). 2010a. Integrated Science Assessment for Carbon 

Monoxide. National Center for Environmental Assessment, Research Triangle Park, NC. EPA/600/R09/019F. January. Available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686.

U.S. Environmental Protection Agency (U.S. EPA). 2010b. Technical Support Document: Summary of Expert 

Opinions on the Existence of a Threshold in the Concentration-Response Function for PM2.5-related 

Mortality. Research Triangle Park, NC. June. Available on the Internet at 

www.epa.gov/ttn/ecas/regdata/Benefits/thresholdstsd.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2010c. Valuing Mortality Risk Reductions for 

Environmental Policy: A White Paper: SAB Review Draft. National Center for Environmental 

Economics December. Available on the Internet at http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE0563-1.pdf/$file/EE-0563-1.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2010e. Guidelines for Preparing Economic Analyses. EPA 

240-R-10-001. National Center for Environmental Economics, Office of Policy Economics and 

Innovation. Washington, DC. December. Available on the Internet at 

http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-0568-50.pdf/$file/EE-0568- 50.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2011a. The Benefits and Costs of the Clean Air Act from 

1990 to 2020. Office of Air and Radiation, Washington, DC. March. 

http://www.epa.gov/air/sect812/feb11/fullreport.pdf. Accessed March 30, 2011.

U.S. Environmental Protection Agency (U.S. EPA). 2011b. Regulatory Impact Analysis for the Final Mercury 

and Air Toxics Standards. EPA-452/R-11-011. December. Available on the Internet at 

http://www.epa.gov/ttn/ecas/regdata/RIAs/matsriafinal.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2011c. 2005 National-Scale Air Toxics Assessment. Office 

of Air Quality Planning and Standards, Research Triangle Park, NC. March. Available on the Internet at 

http://www.epa.gov/ttn/atw/nata2005/.

U.S. Environmental Protection Agency (U.S. EPA). 2011d. Regulatory Impact Analysis: National Emission 

Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and 

Process Heaters. February. Available on the Internet at 

http://www.epa.gov/ttnecas1/regdata/RIAs/boilersriafinal110221_psg.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2012a. Regulatory Impact Analysis for the Final Revisions 

to the National Ambient Air Quality Standards for Particulate Matter. EPA-452/R-12-003. Office of Air 

Quality Planning and Standards, Health and Environmental Impacts Division. December. Available at 

http://www.epa.gov/pm/2012/finalria.pdf.
9-4

U.S. Environmental Protection Agency (U.S. EPA). 2012b. Regulatory Impact Analysis: Petroleum Refineries 

New Source Performance Standards Ja. Office of Air Quality Planning and Standards, Health and 

Environmental Impacts Division. June. Available at 

http://www.epa.gov/ttnecas1/regdata/RIAs/refineries_nsps_ja_final_ria.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2013. Technical Support Document: Estimating the Benefit 

per ton of Reducing PM2.5 Precursors from 17 sectors. Office of Air Quality Planning and Standards, 

Research Triangle Park, NC. February.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2008. Characterizing 

Uncertainty in Particulate Matter Benefits Using Expert Elicitation. EPA-COUNCIL-08-002. July. 

Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/0/43B91173651AED9E85257487004EA6CB/$File/EPACOUNCIL-08-002-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2000. An SAB Report on 

EPA’s White Paper Valuing the Benefits of Fatal Cancer Risk Reduction. EPA-SAB-EEAC-00-013. 

July. Available on the Internet at 

http://yosemite.epa.gov/sab%5CSABPRODUCT.NSF/41334524148BCCD6852571A700516498/$File/e

eacf013.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2004c. Advisory Council 

on Clean Air Compliance Analysis Response to Agency Request on Cessation Lag. EPA-COUNCILLTR-05-001. December. Available on the Internet at <.

http://yosemite.epa.gov/sab/sabproduct.nsf/0/39F44B098DB49F3C85257170005293E0/$File/council_lt

r_05_001.pdf

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2008. Benefits of Reducing 

Benzene Emissions in Houston, 1990–2020. EPA-COUNCIL-08-001. July. Available at 

http://yosemite.epa.gov/sab/sabproduct.nsf/D4D7EC9DAEDA8A548525748600728A83/$File/EPACOUNCIL-08-001-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2009b. Review of EPA’s 

Integrated Science Assessment for Particulate Matter (First External Review Draft, December 2008). 

EPA-COUNCIL-09-008. May. Available on the Internet at 

http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86e/73ACCA834A

B44A10852575BD0064346B/$File/EPA-CASAC-09-008-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2009c. Review of 

Integrated Science Assessment for Particulate Matter (Second External Review Draft, July 2009). EPACASAC-10-001. November. Available on the Internet at 

http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86e/151B1F83B02

3145585257678006836B9/$File/EPA-CASAC-10-001-unsigned.pdf.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2010a. Review of EPA’s 

DRAFT Health Benefits of the Second Section 812 Prospective Study of the Clean Air Act. EPACOUNCIL-10-001. June. Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/9288428b8eeea4c885257242006935a3/59e06b6c5ca665978

52575e7006c5d09!OpenDocument&TableRow=2.3#2.
9-5

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2011. Review of Valuing 

Mortality Risk Reductions for Environmental Policy: A White Paper (December 10, 2010). EPA-SAB11-011 July. Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/298E1F50F844BC23852578DC0059A616/$File/EPA-SAB11-011-unsigned.pdf .

Fann, N., C. M. Fulcher, and B. J. Hubbell. 2009. “The Influence of Location, Source, and Emission Type in 

Estimates of the Human Health Benefits of Reducing a Ton of Air Pollution.” Air Quality, Atmosphere, 

and Health 2:169-176.

Fireplaces & Woodstoves. 2010. “Masonry Heaters.” http://www.fireplacesandwoodstoves.com/indoorfireplaces/masonry-fireplaces.aspx.

Frost & Sullivan. 2010. Project: Market Research and Report on North American Residential Wood Heaters, 

Fireplaces, and Hearth Heating Products Market (P.O. # PO1-IMP402-F&S). Prepared for EC/R.

Fullerton, D., and G. Metcalf. 2002. “Tax Incidence.” In A. Auerbach and M. Feldstein, eds., Handbook of 

Public Economics, Vol. 4, Amsterdam: Elsevier.Hearth, Patio, and Barbeque Association (HPBA). 

2010a. “Comments for the Small Business Advocacy Review (SBAR) Panel, Regarding the Revision of 

New Source Performance Standards for New Residential Wood Heaters.” Comments submitted to EPA 

on September 12, 2010.

Gwinn, M.R., J. Craig, D.A. Axelrad, R. Cook, C. Dockins, N. Fann, R. Fegley, D.E. Guinnup, G. Helfand, B. 

Hubbell, S.L. Mazur, T. Palma, R.L. Smith, J. Vandenberg, and B. Sonawane. 2011. “Meeting report: 

Estimating the benefits of reducing hazardous air pollutants—summary of 2009 workshop and future 

considerations.” Environ Health Perspect. 119(1): p. 125-30.

Hearth, Patio, and Barbeque Association (HPBA). 2010b. “Fireplace Insert Fact Sheet.” Available at: 

http://static.hpba.org/fileadmin/factsheets/product/FS_FireplaceInsert.pdf.

Hearth, Patio, and Barbecue Association (HPBA). 2010c. “Outdoor Heating Options.” Available at: 

http://www.hpba.org/consumers/outdoor-living/outdoor-heating-options.

Houck, J. 2009. “Let’s Not Forget about Coal.” Hearth & Home. December. Available at: 

http://www.hearthandhome.com/articles.html.

Houck, J., and P. Tiegs. 2009. “There’s a Freight Train Comin’.” Hearth & Home. December. Available at: 

http://www.hearthandhome.com/articles.html.

Industrial Economics, Inc (IEc). 2006. Expanded Expert Judgment Assessment of the Concentration-Response 

Relationship Between PM2.5 Exposure and Mortality. Prepared for the U.S. EPA, Office of Air Quality

Planning and Standards, September. Available at: 

http://www.epa.gov/ttn/ecas/regdata/Uncertainty/pm_ee_report.pdf.

Industrial Economics, Inc (IEc). 2009. Section 812 Prospective Study of the Benefits and Costs of the Clean Air 

Act: Air Toxics Case Study—Health Benefits of Benzene Reductions in Houston, 1990–2020. Final 

Report, July 14, 2009. 

http://www.epa.gov/air/sect812/dec09/812CAAA+Benzene_Houston_Final_Report_July_2009.pdf. 

Accessed March 30, 2011. 
9-6

Kochi, I., B. Hubbell, and R. Kramer. 2006. “An Empirical Bayes Approach to Combining Estimates of the 

Value of Statistical Life for Environmental Policy Analysis.” Environmental and Resource Economics

34:385-406.

Krewski D, Jerrett M, Burnett RT, Ma R, Hughes E, Shi, Y, et al. 2009. Extended follow-up and spatial analysis 

of the American Cancer Society study linking particulate air pollution and mortality. HEI Research 

Report, 140, Health Effects Institute, Boston, MA.

Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 2006. Reduction in Fine Particulate Air Pollution and 

Mortality. American Journal of Respiratory and Critical Care Medicine. 173: 667-672.

Landsburg, S.H. 2005. Price Theory and Applications. 6th Ed. Thomson South Western.Mason, OH.

Mankiw, N.G. 1998. Principles of Economics. Orlando, Fl: Dryden Press.

Masonry Heater Association of North America (MHA). 1998. MHA Masonry Heater Definition. Available at: 

http://mha-net.org/docs/def-mha.htm.

Morgenstern, R. D., W. A. Pizer, and J. S. Shih. 2002. “Jobs versus the Environment: An Industry-Level 

Perspective.” Journal of Environmental Economics and Management 43(3):412-436. Available at 

http://ac.els-cdn.com/S009506960191191X/1-s2.0-S009506960191191X-main.pdf?_tid=6bc8845e7c56-11e2-84a7-00000aab0f26&acdnat=1361472319_4fe7ef315e9b2f8fc064c0a767895205

(subscription required). 

Mrozek, J.R., and L.O. Taylor. 2002. “What Determines the Value of Life? A Meta-Analysis.” Journal of 

Policy Analysis and Management 21(2):253-270.

National Research Council (NRC). 2002. Estimating the Public Health Benefits of Proposed Air Pollution 

Regulations. Washington, DC: The National Academies Press.

Nicholson, Walter. 1998. Microeconomic Theory. Orlando: The Dryden Press. 

Northeast States for Coordinated Air Use Management (NESCAUM). 2006. Assessment of Outdoor WoodFired Boilers. March, 2006 (Revised June, 2006). Available at: 

http://www.nescaum.org/documents/assessment-of-outdoor-wood-fired-boilers.

Office of Management and Budget (OMB). 2003. Circular A-4: Regulatory Analysis. Washington, DC. 

Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a-4.html.

Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston. 2002. “Lung 

Cancer, Cardiopulmonary Mortality, and Long-term Exposure to Fine Particulate Air Pollution.”

Journal of the American Medical Association 287:1132-1141.

Roman, Henry A., Katherine D. Walker, Tyra L. Walsh, Lisa Conner, Harvey M. Richmond, Bryan.J. Hubbell, 

and Patrick L. Kinney. 2008. “Expert Judgment Assessment of the Mortality Impact of Changes in 

Ambient Fine Particulate Matter in the U.S. Environmental Science & Technology 42(7):2268-2274.

Seaton, T. 2010. “Masonry Heater Industry Analysis: Residential Sold Fuel Burning Appliance SBREFA 

Process.” Industry comments submitted to EPA on September 12, 2010.
9-7

Sisler, J.F. 1996. Spatial and seasonal patterns and long-term variability of the composition of the haze in the 

United States: an analysis of data from the IMPROVE network. CIRA Report, ISSN 0737-5352-32, 

Colorado State University.

The Risk Management Association. 2008. Annual Statement Studies, Financial Ratio Benchmarks 2008–2009.

Risk Management Association, Philadelphia: 2008.

U.S. Census Bureau. 2007. Survey of Plant Capacity: 2006. “Table 1a. Full Capacity Utilization Rates by

Industry Fourth Quarter 2002–2006.” U.S. Census Bureau: Washington DC. Report No. MQ-C1(06). 

Available at: http://www.census.gov/manufacturing/capacity/historical_data/index.html.

U.S. Census Bureau. 2009. American Community Survey: 2006–2008. Available at: 

http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS&submenId=&_lang+en&_

ts=. U.S. Census Bureau. 2010a. American Fact Finder. Sector 31: Annual Survey of Manufactures: 

General Statistics: Statistics for Industry Groups and Industries: 2008 and 2007. Available at: 

http://factfinder.census.gov. Accessed July 20, 2010.

U.S. Census Bureau. 2010b. American Fact Finder. Sector 23: EC0723SG01: Construction: Summary Series: 

General Summary: Detailed Statistics for Establishments: 2007. Available at: 

http://factfinder.census.gov. Accessed July 20, 2010.

U.S. Census Bureau. 2010c. American Fact Finder. Sector 42: EC0742A1: Wholesale Trade: Geographic Area 

Series: Summary Statistics for the United States, States, Metro Areas, Counties, and Places: 2007. 

Available at: http://factfinder.census.gov. Accessed July 20, 2010.

U.S. Census Bureau. 2010d. American Fact Finder. Sector 44: EC0744A1: Retail Trade: Geographic Area 

Series: Summary Statistics for the United States, States, Metro Areas, Counties, and Places: 2007. 

Available at: http://factfinder.census.gov. Accessed July 20, 2010.

U.S. Census Bureau. 2010e. Census Regions and Divisions of the United States. Available at: 

http://www.census.gov/geo/www/us_regdiv.pdf. Accessed September 12, 2010.

U.S. Census Bureau. 2010f. North American Industrial Classification System [NAICS] Code Definitions Web 

site. Available at: http://www.census.gov/eos/www/naics/.

U.S. Department of Energy (DOE). 2009. “Your Home: Selecting Heating Fuel and System Types.”

ENERGYSTAR Web site. U.S. Department of Energy. Available at: 

http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/mytopic=12330..

U.S. Department of Energy (DOE). 2010. “Your Home: Masonry Heaters.” ENERGYSTAR Web site. U.S. 

Department of Energy. Available at: 

http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/mytopic=12570.

U.S. Energy Information Administration (EIA). 2011. Residential Energy Consumption Survey: 2009. Available 

at: http://www.eia.doe.gov/emeu/recs/recspubuse05/pubuse05.html.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2007. SAB Advisory on 

EPA’s Issues in Valuing Mortality Risk Reduction. EPA-SAB-08-001. October. Available on the 

Internet at 

<http://yosemite.epa.gov/sab/sabproduct.nsf/4128007E7876B8F0852573760058A978/$File/sab-08-

001.pdf >.
9-8

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2009a. Review of EPA’s 

Integrated Science Assessment for Particulate Matter (First External Review Draft, December 2008). 

EPA-COUNCIL-09-008. May. Available on the Internet at 

<http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86e/73ACCA834

AB44A10852575BD0064346B/$File/EPA-CASAC-09-008-unsigned.pdf>.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2009b. Consultation on 

EPA’s Particulate Matter National Ambient Air Quality Standards: Scope and Methods Plan for Health 

Risk and Exposure Assessment. EPA-COUNCIL-09-009. May. Available on the Internet at 

<http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86e/723FE644C5

D758DF852575BD00763A32/$File/EPA-CASAC-09-009-unsigned.pdf>.

U.S. Environmental Protection Agency—Science Advisory Board (U.S. EPA-SAB). 2010. Review of EPA’s 

DRAFT Health Benefits of the Second Section 812 Prospective Study of the Clean Air Act. EPACOUNCIL-10-001. June. Available on the Internet at 

http://yosemite.epa.gov/sab/sabproduct.nsf/0/72D4EFA39E48CDB28525774500738776/$File/EPACOUNCIL-10-001-unsigned.pdf.

U.S. Environmental Protection Agency (EPA). 2002. “Profile of the Pulp and Paper Industry.” Sector Notebook 

Project. Available at: 

http://www.epa.gov/Compliance/resources/publications/assistance/sectors/notebooks/index.html. 

U.S. Environmental Protection Agency (EPA). 2006a. Final Guidance EPA Rulewriters: Regulatory Flexibility 

Act as Amended by the Small Business and Regulatory Enforcement Fairness Act. 

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf.

U.S. Environmental Protection Agency (EPA). 2006b. Regulatory Impact Analysis. 2006 National Ambient Air 

Quality Standards for Particulate Matter. Chapter 5. Available at:

http://www.epa.gov/ttn/ecas/regdata/RIAs/Chapter%205--Benefits.pdf. 

U.S. Environmental Protection Agency (EPA). 2008a. Integrated Science Assessment for Sulfur Oxides—Health 

Criteria (Final Report). National Center for Environmental Assessment, Research Triangle Park, NC. 

Available at: http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843.

U.S. Environmental Protection Agency (U.S. EPA). 2008b. Integrated Science Assessment for Sulfur Oxides—

Health Criteria (Final Report). National Center for Environmental Assessment, Research Triangle Park, 

NC. Available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843.

U.S. Environmental Protection Agency (U.S. EPA). 2008c. Integrated Science Assessment for Oxides of 

Nitrogen—Health Criteria (Final Report). National Center for Environmental Assessment, Research 

Triangle Park, NC. July. Available at at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645.

U.S. Environmental Protection Agency (U.S. EPA). 2008d. Integrated Science Assessment for Oxides of 

Nitrogen and Sulfur–Ecological Criteria National (Final Report). National Center for Environmental 

Assessment, Research Triangle Park, NC. EPA/600/R-08/139. December. Available at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=201485.

U.S. Environmental Protection Agency (U.S. EPA). 2009a. Regulatory Impact Analysis: National Emission 

Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry. Office of 

Air Quality Planning and Standards, Research Triangle Park, NC. April. Available on the Internet at 

<http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementria_4-20-09.pdf >.
9-9

U.S. Environmental Protection Agency (U.S. EPA). 2009b. Integrated Science Assessment for Particulate 

Matter (Final Report). EPA-600-R-08-139F. National Center for Environmental Assessment—RTP 

Division. December. Available on the Internet at 

<http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>.

U.S. Environmental Protection Agency (EPA). 2009c. Subpart AAA-Standards of Performance for New 

Residential Wood Heaters. Discussion Draft. Available at: http://www.hpba.org/admin/NSPS-ReviewDocument.pdf. 

U.S. Environmental Protection Agency (EPA). 2010a. Integrated Science Assessment for Carbon Monoxide. 

National Center for Environmental Assessment, Research Triangle Park, NC. EPA/600/R-09/019F. 

January. Available at: http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686.

U.S. Environmental Protection Agency (EPA). 2010b. Final Regulatory Impact Analysis (RIA) for the SO2

National Ambient Air Quality Standards (NAAQS). Office of Air Quality Planning and Standards, 

Research Triangle Park, NC. June. Available at: 

http://www.epa.gov/ttn/ecas/regdata/RIAs/fso2ria100602full.pdf.

U.S. Environmental Protection Agency (EPA). 2010c. Guidelines for Preparing Economic Analyses. EPA 240-

R-10-001. Washington, DC: National Center for Environmental Economics, Office of Policy Economics 

and Innovation. Available at: http://yosemite.epa.gov/ee/epa/eed.nsf/pages/guidelines.html. 

U.S. Environmental Protection Agency (EPA). 2010d. Lowest Measured Level (LML) Assessment for Rules 

without Policy-Specific Air Quality Data Available: Technical Support Document. Office of Air Quality

Planning and Standards, Research Triangle Park, NC. July. Available at: 

http://www.epa.gov/ttn/ecas/regdata/Benefits/thresholdstsd.pdf.

U.S. Environmental Protection Agency (EPA). 2010e. Regulatory Impact Analysis for the Proposed Federal 

Transport Rule. Office of Air Quality Planning and Standards, Research Triangle Park, NC. July. 

Available at: http://www.epa.gov/ttn/ecas/regdata/RIAs/proposaltrria_final.pdf.

U.S. Environmental Protection Agency (EPA). 2010f. Regulatory Impact Analysis for the SO2 NAAQS. Office 

of Air Quality Planning and Standards, Research Triangle Park, NC. June. Available at: 

http://www.epa.gov/ttn/ecas/regdata/RIAs/fso2ria100602full.pdf.

U.S. Environmental Protection Agency (EPA). May 2004. Final Regulatory Analysis: Control of Emissions 

from Nonroad Diesel Engines. EPA420-R-04-007. Washington, DC: EPA. http://www.epa.gov/nonroaddiesel/2004fr/420r04007.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2010b. Technical Support Document: Summary of Expert 

Opinions on the Existence of a Threshold in the Concentration-Response Function for PM2.5-related 

Mortality. Research Triangle Park, NC. June. Available on the Internet at 

www.epa.gov/ttn/ecas/regdata/Benefits/thresholdstsd.pdf.

U.S. Environmental Protection Agency (U.S. EPA). 2010c. Guidelines for Preparing Economic Analyses. EPA 

240-R-10-001. National Center for Environmental Economics, Office of Policy Economics and 

Innovation. Washington, DC. December. Available on the Internet at

<http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-0568-50.pdf/$file/EE-0568-50.pdf>.
9-10

U.S. Environmental Protection Agency (U.S. EPA). 2011a. The Benefits and Costs of the Clean Air Act from 

1990 to 2020. Office of Air and Radiation, Washington, DC. March. 

http://www.epa.gov/air/sect812/feb11/fullreport.pdf. Accessed March 30, 2011.

U.S. Environmental Protection Agency (U.S. EPA). 2011b. Regulatory Impact Analysis for the Final Transport 

Rule. Office of Air Quality Planning and Standards, Research Triangle Park, NC. June. Available at 

http://www.epa.gov/airtransport/pdfs/FinalRIA.pdf.

U.S. Environmental Protection Agency. 2006. Regulatory Impact Analysis, 2006 National Ambient Air Quality 

Standards for Particulate Matter, Chapter 5. Available at

<http://www.epa.gov/ttn/ecas/regdata/RIAs/Chapter%205--Benefits.pdf >.

U.S. Environmental Protection Agency. 2008a. Regulatory Impact Analysis, 2008 National Ambient Air Quality 

Standards for Ground-level Ozone, Chapter 6. Available at 

<http://www.epa.gov/ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>.

U.S. Housing and Urban Development (HUD). 2008. American Housing Survey for the United States. Multiple 

Years. Table 1A-5. Available at: http://www.census.gov/hhes/www/housing/ahs/nationaldata.html. 

U.S. Small Business Administration (SBA), Office of Advocacy. May 2012. A Guide for Government 

Agencies, How to Comply with the Regulatory Flexibility Act, Implementing the President’s Small 

Business Agenda and Executive Order 13272. Available at 

http://www.sba.gov/sites/default/files/rfaguide_0512_0.pdf. 

U.S. Small Business Administration (SBA). 2013. Table of Small Business Size Standards Matched to North 

American Industry Classification System Codes. Effective July 22. 2013. 

http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf. 

Viscusi, V.K., and J.E. Aldy. 2003. “The Value of a Statistical Life: A Critical Review of Market Estimates 

throughout the World.” Journal of Risk and Uncertainty 27(1):5-76.

Wade, S.H. 2003. “Price Responsiveness in the AEO2003 NEMS Residential and Commercial Buildings Sector 

Models.” http://www.eia.doe.gov/oiaf/analysispaper/elasticity /pdf/buildings.pdf

Wood Heat Organization. 2010. “Fireplace Inserts: The Cure for Cold Fireplaces.” Available at: 

http://www.woodheat.org/technology/inserts.htm. 
9-11

 APPENDIX 

Documentation of Costs for Residential Wood Heaters NSPS Proposal

This appendix of the RIA documents the estimated nationwide cost impacts on manufacturers of 

emission reduction options being considered for residential wood heaters as part of the New Source 

Performance Standards (NSPS) review of residential wood heaters. The underlying cost assumptions for two 

options are summarized herein – the proposed NSPS (“Proposal”) and an alternative approach (“Alternative”) 

which differ in the number of stepped emission limits and in the phased-in compliance dates.

I. Estimated Research and Development (R&D) Costs

A. Residential Wood Heaters – Room Heaters & Central Heaters 

We have heard various estimates of the costs to bring a wood heater from conception to completion, 

from $300,000 for a single model to $1,360,000 for a 4-firebox model line. A recent Hearth and Home article 

estimated the total cost to bring a model from conception to market as $645,000 to $750,000 for steel stoves and 

over $1 million for cast-iron, enameled wood stoves. The authors indicated that costs would decrease for 

separate models in the same line by up to 25%. Based on this information, we estimate that a 4-model steel line 

would cost up to $328,125 per model to develop. These costs include marketing, design, developing first 

generation, second generation and prototype units; NSPS and safety testing, equipment tooling, etc. The 

manufacturer supplying these figures for the article estimated that the NSPS and safety testing component of 

these costs would constitute $40,000 per model. This manufacturer said that development time is 12 to 14 

months for non-catalytic heaters and 10 to 12 months for catalytic heaters.103 

Another manufacturer estimated costs of new product development, including design, prototype 

development, testing, tooling equipment and other manufacturing changes, marketing support, materials, 

training, and education to be in excess of $300,000 over an 8- to 12-month schedule for a relatively 

uncomplicated product. Costs will increase for products that have more sophisticated controls. 104 One other 

manufacturer estimated that their typical model development costs are around $200,000/model.105

Two manufacturers suggested a 14- to 18-month timeframe is required to develop a new firebox, but 

added that it will take from 5 to 6 years of intensive engineering and R&D efforts to have a model line 

consisting of 4 boxes ready-for-manufacture. They agreed that knowledge of the process obtained during each 

 

103 James E. Houck and Paul Tiegs. There’s a Freight Train Comin’. Hearth and Home. December 2009.

104

 Comments from United States Stove Company, Small Entity Representative. July 13, 2010.

105 Confidential Business Information.
9-12

firebox development will shorten (somewhat) the time necessary, but not enough to consider within a guiding 

framework. These manufacturers also provided estimated development costs for a 4-box model line, presented 

in Table A-1.106

Table A-1. Example of Manufacturers’ Estimates of Costs to Develop Model Line (4 Fireboxes)

Cost 

Component

Estimated 

Costs Notes

Salaries $850,000 Using 2-full time experienced employees to bring the products to market, salaries 

and benefits are estimated at $160,000 per year for at least 5.3 years. Tasks include 

design, prototyping, testing, production-line integration, and marketing.

Laboratory 

Equipment

$50,000 In order to accelerate R&D and avoid validating each result with independent 

testing labs (too costly for most manufacturers), new testing equipment will need to 

be purchased in order to sample flue gases, measure test load weight loss, record 

data automatically, and analyze flue gas composition.

Prototypes $25,000 Numerous prototypes will be needed until the final product can be approved. For 

each firebox, an estimated 8 prototypes will be needed, at a cost of $700 each. 

Numerous samples of various components will also have to be purchased from 

vendors. 

Test Fuel* $45,000* Each test costs at least $50 in fuel (assuming cribs are used), including waste. And 

estimated 150 tests will have to be conducted for each firebox for a total of $7,500, 

or $30,000 for a 4-firebox model line based on crib testing.* 

Testing 

Services*

$150,000* Testing services for emissions, efficiency, and safety are estimated to last 

approximately 3 weeks for each firebox. At an average of $1,500 per day plus 

travel expenses, this amounts to approximately $25,000 for each firebox, or 

$100,000 for a 4-firebox model line based on crib testing.*

Outside 

Consultants

$160,000 The average manufacturer will need outside help for design and testing. Testing 

equipment, knowledge of the test standard, and general guidance is normally 

offered by outside consultants (not necessarily certified EPA test labs). The average 

manufacturer will need approximately 300 hours of consulting services per year 

($40,000) for 4 years.

Re-tooling $120,000 For each firebox, new molds and jigs will need to be purchased or produced. Retooling charges will reach an estimated $30,000 per firebox, or $120,000 for a 4-

firebox model line.

Marketing $25,000 New pictures will need to be taken and all the current marketing material, including 

web sites and owner’s manuals, will have to be updated. 

Total $1,425,000 Equal to $356,250/model

*Note: The costs originally provided by industry for this table were presumed to be based on crib wood testing, not 

both crib wood and cord wood testing. Therefore we increased the industry-based “Test Fuel” cost by 50% (to the 

$45,000 shown above) as well as the industry-based “Testing Services” cost by 50% (to the $150,000 shown above) 

in order to estimate the additional cost to test with both crib wood and cord wood.

For this analysis, we used the costs provided in the Table A-1 example, scaled to a single model and 

spread over a 6-year model development timeframe. We prepared an annualized R&D cost estimate by

separating cost elements into direct annual costs (salaries) vs. indirect annual costs (laboratory equipment, 

retooling and other capital costs). We estimated annual capital costs during the amortized R&D cost period as 

 

106 NSPS Review/Revision, and Impact on Our Companies: A Manufacturer’s Position Statement. Prepared by Stove Builder 

International and United States Stove Company. June 2010.
9-13

the fraction that the indirect costs (IAC) are of the Total Annual Cost, approximately 34% annually. Ongoing 

costs such as taxes, overhead, and other routine expenses would be incurred regardless of the NSPS standard, 

and are not included in this analysis. Table A-2 shows the estimated annualized cost of $63,850 per model, 

assuming an amortization period of 6 years and an interest rate of 7%. 

Table A-2. Annual Cost Summary: Development of 4 Model Fireboxes1,2

Direct Annual Costs (DAC)

 Operator labor $141,667 Annual salary cost from Table 1, spread over 6 years.

 Outside Consultants $26,667

Annual outside consultant cost from Table 1, spread over 6 

years.

Total Direct Costs (DC) $168,333

Indirect Annual Costs (IAC)

 Laboratory Equipment1$10,490

The laboratory equipment cost of $50,000 was amortized over 

6 years at an interest rate of 7%. 

 Re-tooling1$25,175

The re-tooling cost of $120,000 was amortized over 6 years at 

an interest rate of 7%.

 Other Capital Costs1,2 $51,400

Other capital costs include costs for prototypes ($25,000), test 

fuel ($30,000+$15,000), testing services ($100,000+$50,000), 

and marketing ($25,000) and were amortized over 6 years at an 

interest rate of 7%. 

Total Indirect Costs (IAC) $87,065

Total Annual Cost $255,399 Annual cost for development of 4 model fireboxes.

Total Annual Cost $63,850 Average annual cost per firebox model.

1 An amortization period of 6 years for laboratory equipment, retooling and other capital costs was chosen 

based on industry's estimate that approximately 5 to 6 years of R&D are required to bring a product to market.

2 To estimate the additional cost to test with both cord wood and crib wood, the test fuel industry estimate of 

$30,000 based on crib only was increased by $15,000 and the testing services industry estimate of $100,000 

based on crib only (which covered not only emissions testing but also efficiency and safety testing) was 

increased by $50,000.

B. Masonry Heaters

Masonry heaters manufacturing cost impacts vary by the type of producer and the type of certification 

method. According to one manufacturer107, the masonry heater industry in the U.S. is dominated by the Finnish 

firm Tulikivi, which manufactures and imports about half of the U.S. masonry heater units installed yearly

through its network of installing distributors. The same manufacturer said that the second largest producer is a 

 

107 Comments: Residential Solid Fuel Burning Appliance SBREFA Process. Product Category: Masonry Heaters. July 13, 2010. 

Timothy Seaton, Timely Construction, Inc. p. 5.
9-14

Canadian firm, Temp-Cast. The remainder of the industry is “dozens” of small producers, with probably fewer 

than 100 (or at least fewer than 200) generating any masonry revenue at all. Some commercial operations sell 

core units and/or design kits based on their own design, and other sell units they license from other U.S. or 

foreign companies. Finally, some units are custom built. Based on this information, we assumed that 50 

percent of masonry heaters sold per year in the U.S. are Tulikivi models and 35 percent are sold by other large 

manufacturers. The remaining 15 percent of units are sold by independent small volume contractors. 

There are three major cost components to consider in evaluating the potential cost impacts of the 

proposed NSPS: research and development (R&D), certification testing, and licensing fees for use of a 

computer software package approved for use in certifying a model design. According to information provided 

by one manufacturer108, R&D costs for a masonry heater may be estimated at $250,000 (compared to the 

$340,000 for other wood heater appliance models noted in Table A-1). We assumed R&D costs were the same 

as for other wood heater appliances – that is, $63,850 annually for a 6-year R&D amortization period. For 

facilities conducting R&D, these costs include the costs for certification testing. We estimate that the cost of 

testing a heater design in an EPA accredited lab to be approximately $10,000.109 

This cost analysis also makes use of a unique software package based on a European masonry heater 

design standard. This standard has been verified in the laboratory and under field conditions to produce 

masonry heaters that would meet the proposed NSPS emission limits. The software produces for printout a 

certification for a given design application and the design definition documents as well as operating instructions 

customized to the given design, so that the software verification and certification record is created for and 

attached to the design. The resulting documents can be submitted as part of the certification application. The 

cost of this software to the user is approximately 1,000 Euros (approximately $1,500) for the package with a 

300 Euro (approximately $450) annual fee that commences in the second year following purchase.110 

II. Estimated Manufacturer Cost Impacts

A. NSPS Options

We developed two primary options to evaluate the cost impacts of implementing new or revised NSPS 

standards for the residential wood heating appliance industry – namely, the proposed approach (“Proposal”) and 

 

108 Comments: Residential Solid Fuel Burning Appliance SBREFA Process. Product Category: Masonry Heaters. July 13, 2010. 

Timothy Seaton, Timely Construction, Inc. p. 14.

109 Letter to Lucinda Power, EPA, from Brian Klipfel, Fire Works Masonry. September 10, 2010.

110 E-mail from Timothy Seaton, Timely Construction Company, to Gil Wood, USEPA. April 21, 2011.
9-15

an alternative approach (“Alternative”). As described in the unit cost memorandum111, the cost analyses assume 

specified phase-in schedules which vary between the Proposal and Alternative.

The Proposal represents a scenario where all types of appliances (except masonry heaters) would be 

required to meet a specified Step 1 emission limit upon promulgation in 2014 and then a stricter Step 2 emission 

limit five years later in 2019. Under this Proposal, large manufacturers of masonry heaters would also be 

required to meet a specified Step 1 emission limit upon promulgation in 2014, while small custom 

manufacturers would not be required to meet this Step 1 emission limit until 2019. There is no Step 2 emission 

limit for masonry heaters being proposed. The Alternative approach represents a scenario where all types of 

appliances (except masonry heaters) would be required to meet a specified Step 1 emission limit upon 

promulgation in 2014 and then an interim Alternative Step 2 emission limit three years after promulgation in 

2017, followed by a stricter Alternative Step 3 emission limit eight years after promulgation in 2022. Masonry 

heaters would be regulated the same way under this Alternative approach as under the Proposal, as explained 

above. Note that the Proposal Step 2 emission limit is the same as the Alternative Step 3 emission limit, but the 

compliance dates differ for this stricter limit (i.e., 2019 versus 2022). These implementation periods represent a 

tentative schedule and are subject to change. 

Following is a summary of the NSPS implementation assumptions for each appliance type, grouped 

according to NSPS Subparts. This summary describes the specific emission limits under the Proposal and the 

Alternative approach. 

Subpart AAA (“room heaters”): 

1. Adjustable burn rate, single burn rate, and pellet stoves: Proposal: Step 1 limit of 4.5 g/hr upon 

promulgation in 2014; and Step 2 limit of 1.3 g/hr five years after promulgation in 2019. 

Alternative: Step 1 limit of 4.5 g/hr upon promulgation in 2014; Step 2 limit of 2.5 g/hr three years 

after promulgation in 2017; and Step 3 limit of 1.3 g/hr eight years after promulgation in 2022. 

Notes on appliances already meeting these limits: The Step 1 limit is the 1995 Washington State 

standard for non-catalytic stoves; the Alternative Step 2 limit is the 1995 Washington State standard 

for catalytic stoves; and the proposed Step 2 (Alternative Step 3) limit is already met by the top 

performing catalytic, non-catalytic and pellet stove models, according to industry data.112 Although 

previously unregulated and a less developed technology than adjustable burn rate stoves, single burn 

rate stove designs have been undergoing R&D in anticipation of the proposed NSPS and cleaner 

designs are nearly market-ready.

113

Under both the Proposal and the Alternative, adjustable burn rate wood stoves (both catalytic and 

non-catalytic), pellet stoves, and single burn rate stoves would face a Step 1 standard that is based on 

the current Washington state standards of 4.5 g/hr emissions for non-catalytic stoves. Industry data10

 

111 Memo to Gil Wood, USEPA, from Jill Mozier, EC/R, Inc. Unit Cost Estimates of Residential Wood Heating Appliances. 

February 21, 2013.

112 Letter to Gil Wood, EPA, from Robert Ferguson, Ferguson, Andors, & Company. April 30, 2010. EC/R made minor changes to 

the data set used in this analysis. See Memo from Jeff Harris, EC/R to Project File. May 3, 2010. Changes to “Final HPBA 

Heater Database” from 2/25/10 Version.

113 2/8/13 telephone discussion between Gil Wood, USEPA, and a manufacturer of single burn rate stoves.
9-16

from 2010 indicate that 90% (130 out of 145 catalytic, non-catalytic and pellet stoves combined) 

already meet this limit, as shown in Table A-1 of Attachment A to the manufacturer’s cost memo. 

The tables in that attachment show the emissions performance of wood stoves that are currently

certified for which we have reproducible emissions data. This list was initially prepared by the 

Hearth, Patio and Barbecue Association (HPBA), and includes the results of an effort to delete 

models that are no longer manufactured and remove duplicate certifications.10 Communication from 

HPBA confirmed that there were 110 non-catalytic wood stoves and 15 catalytic wood stoves being 

manufactured in 2010 by 34 manufacturers or importers of EPA certified wood heaters.114 We 

believe that manufacturers will focus on existing models that meet the Washington State limits in 

order to comply with the Step 1 standard.

Furthermore, the HPBA data10 indicates that 35% (52 out of 145 catalytic, non-catalytic and pellet 

stoves combined) already meet the interim Alternative Step 2 limit of 2.5 g/hr. Finally, this same 

dataset indicates that 10% (14 out of 145 catalytic, non-catalytic and pellet stoves combined) already

meet the strictest proposed Step 2 standard (which is also the Alternative Step 3 standard). Stoves 

meeting these limits are shown in Table A-1 of Attachment A, in which green rows indicate 

compliance with proposed Step 2/Alternative Step 3, green and blue rows indicate compliance with 

interim Alternative Step 2, and green, blue, and orange rows indicate compliance with Step 1. 

Attachment A also includes tables showing this same color-coded compliance for the individual 

catalytic (Table A-2) and pellet stove (Table A-3) datasets. 

Based on this emission data for adjustable burn rate and pellet stoves, for our cost analysis we 

assumed that while major R&D efforts are not needed to meet Step 1, R&D efforts would be 

required to meet the strictest standard.

Single burn rate stoves would also be subject to these stepped standards under Subpart AAA. Given 

the relative lack of previous regulation of these appliance types in the United States, we believe that 

manufacturers will have to redesign all such models to meet the proposed emission limits, and 

reflected that major re-design effort in our cost estimates.

Our specific cost and implementation assumptions under both the Proposal and Alternative scenarios 

are noted below in Sections B & D.

Subpart QQQQ (“central heaters”):

2. Hydronic heaters (both outdoor and indoor): Proposal: Step 1 limit of 0.32 lb/mm BTU heat output 

upon promulgation in 2014; and Step 2 limit of 0.06 lb/mm BTU heat output five years after 

promulgation in 2019. Alternative: Step 1 limit of 0.32 lb/mm BTU heat output upon promulgation 

in 2014; Step 2 limit of 0.15 lb/mm BTU heat output three years after promulgation in 2017; and 

Step 3 limit of 0.06 lb/mm BTU heat output eight years after promulgation in 2022.

Notes on appliances already meeting these limits: The Step 1 limit is the EPA “Phase 2 ” 

voluntary program limit already met by 36 hydronic heater models (27 cord wood and 9 pellet 

models) built by 17 U.S. manufacturers; the Alternative Step 2 limit is already met by 11 hydronic 

heater models (6 cord wood and 5 pellet models) built by 6 U.S. manufacturers; and the proposed 

Step 2 (Alternative Step 3) limit is already met by 4 hydronic heater models (2 cord wood and 2 

pellet models) built by 2 U.S. manufacturers115, as well as over 100 European manufacturers per test 

method EN 303-05.116

 

114Letter to Lucinda Power, EPA, from John Crouch, HPBA. September 12, 2010.

115 See list of cleaner hydronic heaters participating in EPA’s voluntary program at http://www.epa.gov/burnwise/owhhlist.html

116 European Wood-Heating Technology Survey: An Overview of Combustion Principles and the Energy and Emissions Performance 

Characteristics of Commercially Available Systems in Austria, Germany, Denmark, Norway, and Sweden; Final Report; Prepared 

for the New York State Energy Research and Development Authority; NYSERDA Report 10–01; April 2010.
9-17

Based on the EPA’s experience with the hydronic heater market through the voluntary program, we 

understand that it is dominated by a few manufacturers in terms of the bulk of sales, and these 

manufacturers have qualifying units at some or all of the stepped emission limits, as noted above. 

Therefore, on a sales-weighted basis, only a percentage of the hydronic heater models currently sold 

would be required to undertake R&D to meet Step 1, with higher percentages needing R&D to meet 

the interim Alternative Step 2 and the proposed Step 2/Alternative Step 3 limits. However, we 

assumed that all hydronic heater models would begin R&D in 2013 to meet the stricter phased-in 

standards. Our specific cost and implementation assumptions under both the Proposal and 

Alternative scenarios are noted below in Sections B & D.

3. Forced Air Furnaces: Proposal: Step 1 limit of 0.93 lb/mm BTU heat output upon promulgation in 

2014; and Step 2 limit of 0.06 lb/mm BTU heat output five years after promulgation in 2019. 

Alternative: Step 1 limit of 0.93 lb/mm BTU heat output upon promulgation in 2014; Step 2 limit of 

0.15 lb/mm BTU heat output three years after promulgation in 2017; and Step 3 limit of 0.06 lb/mm 

BTU heat output eight years after promulgation in 2022.

4. Notes on appliances already meeting these limits: The Step 1 limit is based on test data from 

development of Canadian standard B415.1-10117 and conversation with industry regarding cleaner 

forced air furnace models currently being tested in R&D

118. Forced air furnace designs able to meet 

the Alternative Step 2 and proposed Step 2 (Alternative Step 3) limits may be based on technology

transferred from hydronic heater designs. Given the relative lack of previous regulation of these 

appliance types in the United States, we assume in our cost analysis that manufacturers will have to 

redesign all such models to meet the proposed emission limits, and reflect that major re-design effort 

in our cost estimates. Our specific cost and implementation assumptions under both the Proposal 

and Alternative scenarios are noted below in Sections B & D.

Subpart RRRR (masonry heaters):

5. Masonry Heaters: Proposal / Alternative (same): Step 1 limit of 0.32 lb/mm BTU heat output upon 

promulgation in 2014 for large manufacturers (defined as manufacturers constructing ≥ 15 masonry

heaters per year), with a 5-year (2019) small volume manufacturer compliance extension (for 

companies constructing < 15 units/year). No other phased-in limits are being proposed.

Notes on appliances already meeting these limits: Based on data submitted by the Masonry

Heater Association119, over 10 models already meet this limit. The masonry heater market is 

dominated by a few large manufacturers and many small custom manufacturers, and these segments 

of the market will take different approaches to come into compliance based on their models (i.e., a 

couple models will undergo R&D, while others who already meet the standards will certify through 

a conventional test or through a software product). Our cost analysis segmented the market 

accordingly and based our cost estimates on specific assumptions relevant to each segment of the 

market. These specific cost and implementation assumptions (which do not differ for the Proposal 

and Alternative) are explained below in Sections C & D.

 

B. Estimated Manufacturer Costs – General Approach

 

117 CSA B415.1-10, Performance Testing of Solid-Fuel-Burning Heating Appliances. Appendix D. March 2010.

118 2/8/13 telephone discussion between Gil Wood, USEPA, and a manufacturer of forced air furnaces.

119 Attachment to 3/25/2011 e-mail from Timothy Seaton of Timely Construction to Gil Wood and Mike Toney of USEPA
9-18

Manufacturers have told us that is takes several years to develop new models. We have spread the 

annualized R&D costs (shown in Table A-2) over 6 years to represent the time and funds needed to develop the 

complying models. For the purposes of our cost estimate, we have assumed that when the NSPS revisions are 

proposed, all manufacturers will begin serious efforts to develop complying models, although for many

manufacturers we also know that they have been involved in intensive R&D efforts in anticipation of the 

proposed rule. 

We estimated both the average annual cost to manufacturers of each appliance type and then extended 

those costs to nationwide total annual costs. The basic components to each manufacturer’s estimated annual cost 

are:

6. Annualized R&D cost;

7. Ongoing annual Certification cost; and

8. Ongoing annual Reporting and Record Keeping cost.

The Annualized R&D costs (shown in Table A-2, and based on the Table A-1 costs) are by far the 

largest cost component and we have applied these costs to most models in our cost analysis – especially to 

models in previously unregulated appliance categories – in order to present a reasonable estimate of the costs. 

For example, as noted above, instead of estimating the number of hydronic heater models that already meet a 

specific limit and will therefore merely need to certify their emissions rather than undergo R&D, we instead 

assumed that 100% of hydronic heater models will undergo R&D beginning in 2013. We made similar 

assumptions for single burn rate stoves and forced air furnaces.

Under the Proposal scenario, one round of R&D is assumed – beginning in 2013 and ending in 2018 – in 

order to meet the proposed Step 2 limit. Under the Alternative scenario, two rounds of R&D are assumed for all 

appliances except masonry heaters (for which there is only one standard with no additional phased-in standards 

to meet). Under the Alternative scenario, the first R&D round begins in 2013 and the second round begins in 

2017 (which causes overlapping R&D costs in years 2017 and 2018 in this analysis) – in order to meet the 

interim Alternative Step 2 limit in 2017 and the Alternative Step 3 limit in 2022. We also assumed that of the 

models undergoing the first round of R&D costs, 80% of these models undergo the second round of R&D costs 

in the Alternative scenario (i.e., we assumed that only 20% of models achieve the strictest limit in the first 

round of R&D).

Furthermore, for appliances like single burn rate stoves and forced air furnaces, which were previously

unregulated (and also were not pushed technologically by a voluntary program, as hydronic heaters were), we 

have conservatively doubled R&D costs during years 2013 and 2014. This doubling of R&D cost estimates is to 
9-19

represent an intensification of the R&D efforts to meet the Step 1 limit and begin development of models to 

meet the stricter stepped limits – R&D efforts which industry has indicated are already ongoing.120

Note that all manufacturers, except for wood stoves that are subject to the current 1988 NSPS, will face 

ongoing certification costs above baseline conditions. However, in the 2013 to 2018 timeframe under the 

Proposal scenario and in the 2013 to 2022 timeframe under the Alternative scenario, we have incorporated these 

costs as part of the overall R&D expenditures. After 2018 under the Proposal scenario and after 2022 under the 

Alternative scenario, the ongoing certification costs will be the only NSPS related costs faced by manufacturers 

besides ongoing reporting and recordkeeping costs. 

Regarding certification costs, we have assumed a cost of $10,000 per model for pellet stoves, single 

burn rate stoves and masonry heaters; and we have assumed a cost of $20,000 per model for hydronic heaters 

and forced air furnaces.121 We have spread these costs out over the 5 year certification life, assuming annual 

certification costs for one-fifth of the models.

For example, pellet stoves will incur certification costs in advance of complying with more stringent 

limits. As explained in Section A and shown in Table A-3 of Attachment A of the manufacturer’s cost memo, 

approximately 30 percent of existing pellet stove models are expected to comply with the proposed Step 2 and 

Alternative Step 3 standard. However, in order to be sold, these stove models would now be required to 

demonstrate compliance with an emissions limit, incurring an upfront cost of $10,000 per model to become 

certified. We have assumed that one fifth of the pellet stove models will certify in any given year. 

We based reporting and recordkeeping (R&R) costs on the annual average costs derived from 

development of the Information Collection Request (ICR) supporting statements122. These are annual estimates 

of the ongoing R&R burden to manufacturers associated with the Proposal and Alternative scenarios. (We do 

not expect the R&R burden to differ substantially between the two scenarios.) 

The certification and reporting and recordkeeping costs were estimated to be incurred by manufacturers 

for the full 20-year model design lifespan.123 Under the Proposal, we estimated costs from 2013 through 2038 –

that is, 20 years after the 2019 compliance year marking the beginning of the model lifespan designed to meet 

the Proposal Step 2 limit. Under the Alternative, we estimated costs from 2013 through 2041 – that is, 20 years 

after the 2022 compliance year marking the beginning of the model lifespan designed to meet the Alternative 

Step 3 limit.

 

120 2/8/13 telephone discussion between Gil Wood, USEPA, and a manufacturer of forced air furnaces and single burn rate stoves.

121 Conversation with Dennis Brazier, Central Boiler. August 9, 2010.

122 ICR Supporting Statements for the Proposed NSPS Subparts have not been finalized as of the date of this memo.

123 Memo to Gil Wood, USEPA, from Jill Mozier, EC/R, Inc. Unit Cost Estimates of Residential Wood Heating Appliances. 

February 21, 2013.
9-20

C. Estimated Manufacturer Costs – Masonry Heaters

As noted above, we addressed masonry heaters in a way which segmented the costs in keeping with the 

masonry heater market. There are three scenarios for potential cost impacts for large masonry heater 

manufacturers. In the case of Tulikivi and some U.S. firms, e.g., Timely Construction, these companies have 

already invested in R&D in order to gain access to U.S. markets which restrict sales (e.g., Colorado) of 

uncertified units. These companies will face testing costs only, with an assumed total of nine tests conducted 

prior to the proposed compliance date (i.e., to certify a total of nine model lines). For purposes of our cost 

analysis, we assumed that two additional companies will conduct R&D to develop two new models each to 

meet the proposed NSPS. Finally, we have been told that Tulikivi will use the software certification approach 

to certify up to eight additional models. We also project that the remaining 15 percent of custom built units will 

use the software certification approach to certify compliance with the proposed NSPS starting in 2013 

(estimated date of the proposed standards) and that they will continue to renew their license in the following 

years. 

As explained in the unit cost memo21, we used data in the Frost & Sullivan Market (F&S) report124 on 

2008 masonry heater shipments by product category and F&S revenue forecasts which incorporated the weak 

economy in years 2009 and 2010, to calculate the reduced number of shipments in years 2009 and 2010. For 

years 2011 through 2038 (for the Proposal) and 2011 through 2041 (for the Alternative) estimated shipments are 

based on a forecasted revenue growth rate of 2.0%, in keeping with the average annual growth in real GDP 

predicted by the US Bureau of Economic Analysis.125 For masonry heaters, our estimate of the number of 

custom built models is based on the average number of models sold per year in the 15 percent model category

(i.e., 85 per year). We assumed each custom manufacturer would sell 2 models per year, for a total of 42 

manufacturers participating in the software certification option.

Under both the Proposal and Alternative scenarios, most sales-weighted masonry heater units face a 

2014 Step 1 compliance date with no other phased-in limits. However, under both the Proposal and Alternative 

scenarios, companies that sell fewer than 15 units per year have until 2019 to come into compliance. We have 

assumed that the large manufacturers will comply by 2014 for the units that only require testing and/or software 

certification, with those expenditures incurred annually starting in 2013. We also assumed that the 15 percent 

of custom built units will comply by 2019, but will begin certifying their units using the software certification 

approach as early as 2013, as noted above, as a selling point for their services. For those companies that start 

R&D when the NSPS is proposed in 2013, we have assumed that they will spread these costs over the 6-year 

period from 2013 through 2018 for the four models affected, under both the Proposal and Alternative scenarios.

 

124 Market Research and Report on North American Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market. 

Prepared by Frost & Sullivan. April 26, 2010. P. 31 -32.

125 2013 Global Outlook projections prepared by the Conference Board in November 2012; http://www.conferenceboard.org/data/globaloutlook.cfm
9-21

D. Estimated Manufacturer Costs – Specific Assumptions & Resulting Costs

Table A-3a shows the estimated annual cost per manufacturer under the Proposal for all appliances. 

Table A-3b shows the nationwide annual costs under the Proposal. The footnotes associated with the tables (not 

included in the tables shown on the following pages) help better explain the details we assumed for the cost 

analysis and are listed below. For the Proposal, the footnoted assumptions underlying Tables A-3a and A-3b 

are:

1. Nationwide Annual Cost assumes R&D investment is amortized over 6 years (2013 through 2018). 

Ongoing certification costs are incurred through 2038 (based on a model brought to market in 2019 

with a lifespan of 20 years), except for woodstoves which already incur certification costs under the 

existing NSPS.

2. Since certification is required every 5 years (except for the software certification option for masonry

heaters), it is assumed that certification costs will be spread out so that 1/5 of the models certify each 

year.

3. This analysis considers additional costs resulting from the proposed NSPS. For wood stoves, the 

analysis assumes that 5% meet Step 2 already so that 95% of the models will undergo re-design to 

meet the Step 2 level. The costs modeled for years 2020 through 2038 exclude the ongoing 

certification costs and ongoing reporting and recordkeeping costs incurred by wood stove 

manufacturers who already had to certify and report under the existing NSPS.

4. For pellet stoves, the analysis assumes that 30% meet Step 2 already so that 70% of models undergo 

R&D re-design to meet Step 2. The R&D budget includes certification costs. The analysis also 

assumes that the 30% of the pellet stove models which already meet Step 2 will certify in an ongoing 

basis starting in 2013. The analysis reflects the certification costs beginning in 2013 for the 30% of 

models meeting Step 2, and beginning in 2019 for the remaining 70% of models which underwent 

R&D re-design.

5. Based on conversations with industry (2/2013), single burn rate stoves and forced air furnaces have 

been undergoing R&D prior to 2013 to develop cleaner models. Because these devices were 

previously unregulated and may need to transfer technology from adjustable burn rate stoves and 

hydronic heaters respectively, this analysis assumes that these efforts will intensify in 2013 and 

2014. Therefore estimated R&D costs are doubled in 2013 and 2014 in order to meet the 2014 Step 1 

standard while also beginning R&D to develop models to meet the more stringent 2019 Step 2 

standard.

6. For single burn rate stoves, forced air furnaces, and hydronic heating systems, the analysis assumes 

that only a small percentage meet Step 2 so that approximately 100% of the models undergo R&D 

re-design to meet Step 2. The R&D budget includes certification costs. Ongoing certification costs 

for the re-designed models are reflected in this analysis beginning in 2019.

7. For masonry heaters, the cost analysis assumes one round of R&D to meet 0.32 lb/mmBTU standard 

(no additional stepped standards, although large manufacturers will be required to meet the limit in 

2014, while small volume manufacturers will be given a 5 year extension until 2019 to meet the 

limit). For masonry heater manufacturers using software certification, the analysis assumes the 

purchased software will be used for certifying all models developed by that manufacturer.
9-22

8. Reporting and recordkeeping costs (R&R) [for all appliances but masonry heaters] are based on the 

annual average costs derived from the ICR and are estimates of the ongoing R&R burden to 

manufacturers associated with the proposed NSPS. The annual average nationwide R&R burden 

estimated to manufacturers for Subpart AAA is $440,443, and for Subpart QQQQ is $119,249. 

These R&R costs do not include the R&R burden to laboratories; the annual average nationwide 

R&R burden incurred by laboratories subject to requirements under Subpart AAA is estimated to be 

$75,745, and incurred by laboratories subject to requirements under Subpart QQQQ is estimated to 

be $50,496.

9. [Masonry Heater] Reporting and recordkeeping costs (R&R) are based on the annual average costs 

derived from the ICR and are estimates of the ongoing R&R burden to manufacturers associated 

with the proposed NSPS. The annual average nationwide R&R burden estimated to manufacturers 

for Subpart RRRR is $98,788 for small/custom masonry heater manufacturers and $25,929 for large 

masonry heater manufacturers. These R&R costs do not include the R&R burden to laboratories; the 

annual average nationwide R&R burden incurred by laboratories subject to requirements under 

Subpart RRRR is estimated to be $37,872.

Table A-4a shows the estimated annual cost per manufacturer under the Alternative approach for all 

appliances. Table A-4b shows the nationwide annual costs under the Alternative. For the Alternative approach, 

the footnoted assumptions underlying Tables 4a and 4b (where different from the footnotes listed above) are:

1. Nationwide Annual Cost assumes R&D investment is amortized over 6 years (round one from 2013 

through 2018 and round two from 2017 through 2022). Ongoing certification costs are incurred 

through 2041 (based on a model brought to market in 2022 with a lifespan of 20 years), except for 

woodstoves which already incur certification costs under the existing NSPS.

2. (Same as above)

3. This analysis considers additional costs resulting from the proposed NSPS. For wood stoves, the 

analysis assumes that 5% meet Step 3 already so that 95% of the models will undergo re-design in 

round one, and 80% of those 95% will require another round of R&D to meet the Step 3 level. The 

costs exclude the ongoing certification costs and ongoing reporting and recordkeeping costs incurred 

by wood stove manufacturers who already had to certify and report under the existing NSPS.

4. For pellet stoves, the analysis assumes that 30% meet Step 3 already so that 70% of models undergo 

re-design in round one, and 80% of those 70% require another round of R&D to meet Step 3. The 

R&D budget includes certification costs. The analysis also assumes that the 30% of the pellet stove 

models which already meet Step 3 will certify in an ongoing basis starting in 2013.

5. Based on conversations with industry (2/2013), single burn rate stoves and forced air furnaces have 

been undergoing R&D prior to 2013 to develop cleaner models. Because these devices were 

previously unregulated and may need to transfer technology from adjustable burn rate stoves and 

hydronic heaters respectively, this analysis assumes that these efforts will intensify in 2013 and 

2014. Therefore estimated R&D costs are doubled in 2013 and 2014 in order to meet the 2014 Step 1 

standard while also beginning R&D to develop models to meet the more stringent 2017 Step 2 and 

2022 Step 3 standards.
9-23

6. For single burn rate stoves, forced air furnaces, and hydronic heating systems, the analysis assumes 

that only a small percentage meet Step 3 so that approximately 100% of the models undergo redesign in round one, and 80% require another round of R&D to meet Step 3. The R&D budget 

includes certification costs.

7. (Same as above)

8. (Same as above)

9. (Same as above)
24

Table A-3a. Average Annual Cost per Manufacturer under the Proposal

2013

(Step 1

compliance) 

2014 2015 2016 2017 2018

(Step 2

compliance) 

2019

2020 

through 

20382

Wood Stoves (R&D)334 125 $223,004 $223,004 $223,004 $223,004 $223,004 $223,004 $0 $0

Pellet Stoves (R&D, R&R)4,829 125 $199,681 $199,681 $199,681 $199,681 $199,681 $199,681 $7,031 $7,031

Pellet Stoves (certification)429 125 $2,586 $2,586 $2,586 $2,586 $2,586 $2,586 $8,621 $8,621

Single Burn Rate Stoves (R&D, R&R, cert.)5, 6, 8 3 20 $862,204 $862,204 $436,539 $436,539 $436,539 $436,539 $24,208 $24,208

Forced Air Furnaces (R&D, R&R, cert.)5, 6, 8 7 50 $917,148 $917,148 $461,079 $461,079 $461,079 $461,079 $33,582 $33,582

Hydronic Heating Systems (R&D, R&R, cert.)6, 8 30 120 $258,204 $258,204 $258,204 $258,204 $258,204 $258,204 $18,806 $18,806

MH - large companies (R&D, R&R, cert.)92 4 $130,169 $130,169 $130,169 $130,169 $130,169 $130,169 $6,469 $6,469

MH - large companies (R&R, cert.)93 9 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704

MH - large companies (R&R, software cert.)7, 9 1 8 $11,378 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328

MH - small companies (R&R, software cert.)7, 9 42 85 $3,852 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802

Average Annual Cost per Manufacturer based on 6-year R&D round (2013-2018) to meet Step 1 and Step 2 limits 

with ongoing certification costs (through 2038)

# 

Manufacturers# 

Models

QQQQ: Central Heaters

RRRR: Masonry Heaters

AAA: Room Heaters

NSPS Subpart Appliance Type
25

Table A-3b. Nationwide Annual Costs under the Proposal

2013

(Step 1 

compliance)

2014 2015 2016 2017 2018

(Step 2

compliance) 

2019

2020 

through 

20382

Wood Stoves (R&D)334 125 $7,582,146 $7,582,146 $7,582,146 $7,582,146 $7,582,146 $7,582,146 $0 $0

Pellet Stoves (R&D, R&R)4,829 125 $5,790,753 $5,790,753 $5,790,753 $5,790,753 $5,790,753 $5,790,753 $203,909 $203,909

Pellet Stoves (certification)429 125 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $250,000 $250,000

Single Burn Rate Stoves (R&D, R&R, cert.)5, 6, 8 3 20 $2,586,611 $2,586,611 $1,309,618 $1,309,618 $1,309,618 $1,309,618 $72,625 $72,625

$16,034,510 $16,034,510 $14,757,517 $14,757,517 $14,757,517 $14,757,517 $526,534 $526,534

Forced Air Furnaces (R&D, R&R, cert.)5, 6, 8 7 50 $6,420,038 $6,420,038 $3,227,556 $3,227,556 $3,227,556 $3,227,556 $235,073 $235,073

Hydronic Heating Systems (R&D, R&R, cert.)6, 8 30 120 $7,746,133 $7,746,133 $7,746,133 $7,746,133 $7,746,133 $7,746,133 $564,176 $564,176

$14,166,171 $14,166,171 $10,973,689 $10,973,689 $10,973,689 $10,973,689 $799,249 $799,249

MH - large companies (R&D, R&R, cert.)92 4 $260,337 $260,337 $260,337 $260,337 $260,337 $260,337 $12,939 $12,939

MH - large companies (R&R, cert.)93 9 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112

MH - large companies (R&R, software cert.)7, 9 1 8 $11,378 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328

MH - small companies (R&R, software cert.)7, 9 42 85 $161,788 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688

$462,616 $417,466 $417,466 $417,466 $417,466 $417,466 $170,067 $170,067

$30,663,297 $30,618,147 $26,148,672 $26,148,672 $26,148,672 $26,148,672 $1,495,850 $1,495,850

# 

Manufacturers# 

Models

Nationwide Annual Costs1

QQQQ: Central Heaters

RRRR: Masonry Heaters

AAA: Room Heaters

NSPS Subpart Appliance Type

Annual Cost of the Rule
26

Table A-4a. Average Annual Cost per Manufacturer under the Alternative Approach

2013

(Step 1 

compliance) 

2014 2015 2016

(Step 2 

compliance) 

2017 2018 2019 2020 2021

(Step 3 

compliance) 

2022

2023 

through 

2041 2

Wood Stoves (R&D)334 125 $223,004 $223,004 $223,004 $223,004 $394,080 $394,080 $171,076 $171,076 $171,076 $171,076 $0

Pellet Stoves (R&D, R&R)4, 8 29 125 $199,681 $199,681 $199,681 $199,681 $347,471 $347,471 $154,821 $154,821 $154,821 $154,821 $7,031

Pellet Stoves (certification)429 125 $2,586 $2,586 $2,586 $2,586 $2,586 $2,586 $3,793 $3,793 $3,793 $3,793 $8,621

Single Burn Rate Stoves (R&D, R&R, cert.)5, 6, 8 3 20 $862,204 $862,204 $436,539 $436,539 $763,085 $763,085 $340,087 $340,087 $340,087 $340,087 $24,208

Forced Air Furnaces (R&D, R&R, cert.)5, 6, 8 7 50 $917,148 $917,148 $461,079 $461,079 $810,949 $810,949 $360,594 $360,594 $360,594 $360,594 $33,582

Hydronic Heating Systems (R&D, R&R, cert.)6, 8 30 120 $258,204 $258,204 $258,204 $258,204 $454,131 $454,131 $201,933 $201,933 $201,933 $201,933 $18,806

MH - large companies (R&D, R&R, cert.)92 4 $130,169 $130,169 $130,169 $130,169 $130,169 $130,169 $6,469 $6,469 $6,469 $6,469 $6,469

MH - large companies (R&R, cert.)93 9 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704 $9,704

MH - large companies (R&R, software cert.)7, 9 1 8 $11,378 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328

MH - small companies (R&R, software cert.)7, 9 42 85 $3,852 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802 $2,802

Appliance Type

# 

Manufacturers# 

Models

Average Annual Cost per Manufacturer based on initial 6-year R&D round (2013-2018) and second R&D round (2017-2022) to meet Step 3 level 

with ongoing certification costs (through 2041)

QQQQ: Central Heaters

RRRR: Masonry Heaters

AAA: Room Heaters

NSPS Subpart
27

Table A-4b. Nationwide Annual Costs under the Alternative Approach

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

2023 

through 

2041 2 

Wood Stoves (R&D)334 125 $7,582,146 $7,582,146 $7,582,146 $7,582,146 $13,398,730 $13,398,730 $5,816,584 $5,816,584 $5,816,584 $5,816,584 $0

Pellet Stoves (R&D, R&R)4, 8 29 125 $5,790,753 $5,790,753 $5,790,753 $5,790,753 $10,076,657 $10,076,657 $4,489,813 $4,489,813 $4,489,813 $4,489,813 $203,909

Pellet Stoves (certification)429 125 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $110,000 $110,000 $110,000 $110,000 $250,000

Single Burn Rate Stoves (R&D, R&R, cert.)5, 6, 8 3 20 $2,586,611 $2,586,611 $1,309,618 $1,309,618 $2,289,254 $2,289,254 $1,020,261 $1,020,261 $1,020,261 $1,020,261 $72,625

$16,034,510 $16,034,510 $14,757,517 $14,757,517 $25,839,640 $25,839,640 $11,436,657 $11,436,657 $11,436,657 $11,436,657 $526,534

Forced Air Furnaces (R&D, R&R, cert.)5, 6, 8 7 50 $6,420,038 $6,420,038 $3,227,556 $3,227,556 $5,676,644 $5,676,644 $2,524,161 $2,524,161 $2,524,161 $2,524,161 $235,073

Hydronic Heating Systems (R&D, R&R, cert.)6, 8 30 120 $7,746,133 $7,746,133 $7,746,133 $7,746,133 $13,623,945 $13,623,945 $6,057,987 $6,057,987 $6,057,987 $6,057,987 $564,176

$14,166,171 $14,166,171 $10,973,689 $10,973,689 $19,300,588 $19,300,588 $8,582,148 $8,582,148 $8,582,148 $8,582,148 $799,249

MH - large companies (R&D, R&R, cert.)92 4 $260,337 $260,337 $260,337 $260,337 $260,337 $260,337 $12,939 $12,939 $12,939 $12,939 $12,939

MH - large companies (R&R, cert.)93 9 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112 $29,112

MH - large companies (R&R, software cert.)7, 9 1 8 $11,378 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328 $10,328

MH - small companies (R&R, software cert.)7, 9 42 85 $161,788 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688 $117,688

$462,616 $417,466 $417,466 $417,466 $417,466 $417,466 $170,067 $170,067 $170,067 $170,067 $170,067

$30,663,297 $30,618,147 $26,148,672 $26,148,672 $45,557,694 $45,557,694 $20,188,873 $20,188,873 $20,188,873 $20,188,873 $1,495,850

Appliance Type

Annual Cost of the Rule

# 

Manufacturers# 

Models

Nationwide Annual Costs1

QQQQ: Central Heaters

RRRR: Masonry Heaters

AAA: Room Heaters

NSPS Subpart
9-1

It should be noted that Tables A-3a, A-3b, A-4a, and A-4b are based on a 7% interest rate and are in 2010 dollars($). We also 

prepared these cost estimates based on a 3% interest rate. Note also that costs vary by appliance type based on the average number of 

models per manufacturer. The estimate of the number of model types are described in the unit cost memo.126 For numbers of 

manufacturers, we started with HPBA data, modified based on internet searches of manufacturers of the major appliance types. 127

The total nationwide cost of the rule from years 2014 through 2022 for the Proposal and the Alternative differ based on the 

underlying cost and implementation assumptions described in this memo, and are summarized below in Table A-5.

Table A-5. Nationwide Annual Cost of the Rule under the Proposal and Alternative Approach

Year Cost under Proposal 

(2010$)

Cost under Alternative 

Approach (2010$)

2014 30,618,147 30,618,147

2015 26,148,672 26,148,672

2016 26,148,672 26,148,672

2017 26,148,672 45,557,694

2018 26,148,672 45,557,694

2019 1,495,850 20,188,873

2020 1,495,850 20,188,873

 

126 Memo to Gil Wood, USEPA, from Jill Mozier, EC/R, Inc. Unit Cost Estimates of Residential Wood Heating Appliances. February 21, 2013.

127 HPBA Solid Fuel Product List. Attachment to E-mail from John Crouch, HBPS, to Gil Wood, EPA. September 24, 2010.
9-2

2021 1,495,850 20,188,873

2022 1,495,850 20,188,873

Finally, Tables A-6 and A-7 provide annual costs and emissions, and emission reductions associated with the Proposal and 

Alternative options, respectively, for each year included in the analyses, including impacts of the rule beyond 2022, and cumulative 

impacts for each option. 
9-3

Table A-6. Cost Effectiveness (CE) based on annual and cumulative PM2.5 emissions from Central Heaters (Forced Air Furnaces and Hydronic Heating 

Systems) and Room Heaters (Wood Stoves, Pellet Stoves, and Single Burn Rate Stoves) for the Proposal Option

Year

Annual 

Capital 

Costs

Nationwide 

Annual 

Cost1

Nationwide 

Average 

Annual Cost 

Annual Snapshots

Emission Reduction, cumulative per 

year

CE based 

on total 

cost & 

cumulative 

emission 

reduction 

over 20-

year stove 

lifespan 

(per ton)

Baseline 

PM2.5

Emissions2

(tons)

NSPS 

PM2.5

Emissions

2

(tons)

Emission 

Reduction 

(tons)

CE based 

on 

nationwide 

average 

annual cost 

(per ton)

Baseline 

PM2.5

Emissions 

(tons)

NSPS 

PM2.5

Emissions 

(tons)

Emission 

Reduction 

(tons)

2013 3$4,754,295 $10,883,300 $3,289,936

2014 4$4,754,295 $10,883,300 $3,289,936 5,587 1,760 3,827 $860 5,587 1,760 3,827

2015 $4,068,766 $9,314,021 $3,289,936 5,699 1,795 3,903 $843 11,285 3,556 7,730

2016 $4,068,766 $9,314,021 $3,289,936 5,812 1,831 3,981 $826 17,098 5,387 11,711

2017 $4,068,766 $9,314,021 $3,289,936 5,929 1,868 4,061 $810 23,026 7,255 15,771

2018 $4,068,766 $9,314,021 $3,289,936 6,047 1,905 4,142 $794 29,074 9,161 19,913

2019 4$0 $1,325,783 $3,289,936 6,168 464 5,705 $577 35,242 9,624 25,618

2020 $0 $1,325,783 $3,289,936 6,292 473 5,819 $565 41,534 10,097 31,437

2021 $0 $1,325,783 $3,289,936 6,417 482 5,935 $554 47,951 10,579 37,372

2022 $0 $1,325,783 $3,289,936 6,546 492 6,054 $543 54,497 11,071 43,425

2023 $0 $1,325,783 $3,289,936 6,677 502 6,175 $533 61,174 11,573 49,600

2024 $0 $1,325,783 $3,289,936 6,810 512 6,298 $522 67,984 12,085 55,899

2025 $0 $1,325,783 $3,289,936 6,946 522 6,424 $512 74,930 12,607 62,323

2026 $0 $1,325,783 $3,289,936 7,085 533 6,553 $502 82,016 13,140 68,876

2027 $0 $1,325,783 $3,289,936 7,227 543 6,684 $492 89,243 13,683 75,560

2028 $0 $1,325,783 $3,289,936 7,372 554 6,818 $483 96,614 14,237 82,377

2029 $0 $1,325,783 $3,289,936 7,519 565 6,954 $473 104,133 14,802 89,331

2030 $0 $1,325,783 $3,289,936 7,669 576 7,093 $464 111,803 15,379 96,424
9-4

2031 $0 $1,325,783 $3,289,936 7,823 588 7,235 $455 119,626 15,967 103,659

2032 $0 $1,325,783 $3,289,936 7,979 600 7,380 $446 127,605 16,566 111,039

2033 $0 $1,325,783 $3,289,936 8,139 612 7,527 $437 135,744 17,178 118,566

2034 $0 $1,325,783 $3,289,936 8,302 624 7,678 $429 138,459 16,042 122,417

2035 $0 $1,325,783 $3,289,936 8,468 636 7,831 $420 141,228 14,883 126,345

2036 $0 $1,325,783 $3,289,936 8,637 649 7,988 $412 144,052 13,701 130,352

2037 $0 $1,325,783 $3,289,936 8,810 662 8,148 $404 146,933 12,495 134,439

2038 $0 $1,325,783 $3,289,936 8,986 675 8,311 $396 149,872 11,265 138,607

2039 143,704 10,801 132,903

2040 137,412 10,328 127,084

2041 130,995 9,846 121,149

2042 124,449 9,354 115,095

2043 117,772 8,852 108,920

2044 110,962 8,340 102,622

2045 104,016 7,818 96,198

2046 96,930 7,286 89,645

2047 89,703 6,742 82,961

2048 82,332 6,188 76,143

2049 74,812 5,623 69,189

2050 67,143 5,047 62,096

2051 59,320 4,459 54,862

2052 51,341 3,859 47,482

2053 43,202 3,247 39,955

2054 34,900 2,623 32,277

26,433 1,987 24,446

2056 17,796 1,338 16,458

2057 8,986 675 8,311
9-5

Nationwide cumulative cost5$85,538,348

Cumulative Emission 

Reduction over 20-year 

stove lifespan 1,546,402 $55

1 Estimated nationwide annual costs are in 2010 $ and are based on a 6-year amortization period of R&D costs at a 7% interest rate (during 2013-2018), plus annual 

certification and reporting & recordkeeping costs (ongoing through 2038). Years 2039 through 2057 are past the 20-year model design lifespan used in this analysis.

2 Estimated annual emissions are based on a forecasted revenue growth rate (as a surrogate for shipments) of 2.0 % from 2011 through 2038, in keeping with the 

average annual growth in real GDP predicted by the US Bureau of Economic Analysis (2013 Global Outlook projections prepared by the Conference Board in 

November 2012; see http://www.conference-board.org/data/globaloutlook.cfm ). 

3

2013 costs assume manufacturers will begin R&D phase and begin certifying models in anticipation of the 2014 rule compliance date. Emissions in 2013, however, 

are not included in this analysis because it is prior to the rule compliance date.

4 Estimated emissions assume Step 1 standard becomes applicable in 2014 and Step 2 standard in 2019. No emission reductions are estimated to result from 

woodstoves and pellet stoves until 2019, although emission reductions are estimated for all other devices starting in 2014 .

5 The nationwide cumulative cost represents the cost to manufacturers resulting from the R&D re-design to meet the proposed NSPS and the NSPS-caused 

certification and reporting & recordkeeping costs to bring these stoves to market from 2013 through 2038. These stoves have lifespans of 20 years or more; thus 

stoves shipped in 2038 will be emitting through 2057.
9-6

Table A-7. Cost Effectiveness (CE) based on annual and cumulative PM2.5 emissions from Central Heaters (Forced Air Furnaces and Hydronic Heating 

Systems) and Room Heaters (Wood Stoves, Pellet Stoves, and Single Burn Rate Stoves) for the Alternative Option

Year

Annual 

Capital 

Costs

Nationwide 

Annual Cost1

Nationwide 

Average 

Annual Cost 

Annual Snapshots

Emission Reduction, cumulative per 

year

CE based 

on total 

cost & 

cumulative 

emission 

reduction 

over 20-

year stove 

lifespan 

(per ton)

Baseline 

PM2.5

Emissions2

(tons)

NSPS 

PM2.5

Emissions2

(tons)

Emission 

Reduction 

(tons)

CE based 

on 

nationwide 

average 

annual cost 

(per ton)

Baseline 

PM2.5

Emissions 

(tons)

NSPS 

PM2.5

Emissions 

(tons)

Emission 

Reduction 

(tons)

2013 3$10,295,398 $30,200,681 $10,600,322

2014 4$10,295,398 $30,200,681 $10,600,322 5,587 1,760 3,827 $2,770 5,587 1,760 3,827

2015 $8,771,756 $25,731,206 $10,600,322 5,699 1,795 3,903 $2,716 11,285 3,556 7,730

2016 $8,771,756 $25,731,206 $10,600,322 5,812 1,831 3,981 $2,663 17,098 5,387 11,711

2017 4$15,388,282 $45,140,228 $10,600,322 5,929 906 5,022 $2,111 23,026 6,294 16,733

2018 $15,388,282 $45,140,228 $10,600,322 6,047 925 5,123 $2,069 29,074 7,218 21,856

2019 $6,824,401 $20,018,806 $10,600,322 6,168 943 5,225 $2,029 35,242 8,161 27,081

2020 $6,824,401 $20,018,806 $10,600,322 6,292 962 5,330 $1,989 41,534 9,123 32,411

2021 $6,824,401 $20,018,806 $10,600,322

2022 4$6,824,401 $20,018,806 $10,600,322 6,546 492 6,054 $1,751 54,497 10,596 43,901

2023 $0 $1,325,783 $10,600,322 6,677 502 6,175 $1,717 61,174 11,098 50,076

2024 $0 $1,325,783 $10,600,322 6,810 512 6,298 $1,683 67,984 11,610 56,374

2025 $0 $1,325,783 $10,600,322 6,946 522 6,424 $1,650 74,930 12,132 62,798
9

-7

2026 $0 $1,325,783 $10,600,322 7,085 533 6,553 $1,618 82,016 12,664 69,351

2027 $0 $1,325,783 $10,600,322 7,227 543 6,684 $1,586 89,243 13,208 76,035

2028 $0 $1,325,783 $10,600,322 7,372 554 6,818 $1,555 96,614 13,762 82,853

2029 $0 $1,325,783 $10,600,322 7,519 565 6,954 $1,524 104,133 14,327 89,806

2030 $0 $1,325,783 $10,600,322 7,669 576 7,093 $1,494 111,803 14,903 96,899

2031 $0 $1,325,783 $10,600,322 7,823 588 7,235 $1,465 119,626 15,491 104,134

2032 $0 $1,325,783 $10,600,322 7,979 600 7,380 $1,436 127,605 16,091 111,514

2033 $0 $1,325,783 $10,600,322 8,139 612 7,527 $1,408 135,744 16,703 119,041

2034 $0 $1,325,783 $10,600,322 8,302 624 7,678 $1,381 138,459 15,567 122,892

2035 $0 $1,325,783 $10,600,322 8,468 636 7,831 $1,354 141,228 14,408 126,820

2036 $0 $1,325,783 $10,600,322 8,637 649 7,988 $1,327 144,052 13,225 130,827

2037 $0 $1,325,783 $10,600,322 8,810 662 8,148 $1,301 146,933 12,981 133,952

2038 $0 $1,325,783 $10,600,322 8,986 675 8,311 $1,276 149,872 12,732 137,140

2039 $0 $1,325,783 $10,600,322 9,166 689 8,477 $1,251 152,870 12,478 140,392

2040 $0 $1,325,783 $10,600,322 9,349 703 8,646 $1,226 155,927 12,219 143,708

2041 $0 $1,325,783 $10,600,322 9,536 717 8,819 $1,202 159,045 11,954 147,091

2042 152,500 11,462 141,037

2043 145,823 10,960 134,863

2044 139,013 10,449 128,564

2045 132,066 9,926 122,140

2046 124,981 9,394 115,587

2047 117,754 8,851 108,903

2048 110,382 8,297 102,086

2049 102,863 7,731 95,132

2050 95,194 7,155 88,039

2051 87,371 6,567 80,804

79,392 5,967
9-8

2053 71,253 5,356 65,897

2054 62,951 4,732 58,220

2055 54,483 4,095 50,388

2056 45,846 3,446 42,400

2057 37,037 2,784 34,253

2058 28,051 2,108 25,942

2059 18,885 1,419 17,466

2060 9,536 717 8,819

Nationwide cumulative cost5$307,409,335

Cumulative Emission 

Reduction over 20-year 

stove lifespan 1,641,055 $187

1 Estimated nationwide annual costs are in 2010 $ and are based on 6-year amortization periods of R&D costs at a 7% interest rate (during 2013-2018 for round one 

R&D and 2017-2022 for round two R&D), plus annual certification and reporting & recordkeeping costs (ongoing through 2041). Years 2042 through 2060 are past 

the 20-year model design lifespan used in this analysis.

2 Estimated annual emissions are based on a forecasted revenue growth rate (as a surrogate for shipments) of 2.0 % from 2011 through 2041, in keeping with the 

average annual growth in real GDP predicted by the US Bureau of Economic Analysis (2013 Global Outlook projections prepared by the Conference Board in 

November 2012; see http://www.conference-board.org/data/globaloutlook.cfm). 

3

2013 costs assume manufacturers will begin R&D phase and begin certifying models in anticipation of the 2014 rule compliance date. Emissions in 2013, however, 

are not included in this analysis because it is prior to the rule compliance date.

4 Estimated emissions assume Step 1 standard becomes applicable in 2014, Step 2 standard in 2017, and Step 3 standard in 2022. No emission reductions are estimated 

for woodstoves and pellet stoves until 2017, although emission reductions are estimated for all other devices starting in 2014.

5 The nationwide cumulative cost represents the cost to manufacturers resulting from the R&D round(s) to meet the proposed NSPS and the NSPS-caused certification 

and reporting & recordkeeping costs to bring these stoves to market from 2013 through 2041. These stoves have lifespans of 20 years or more; thus stoves shipped in 

2041 will be emitting through 2060.
9-9

Attachment A 

Table AA-1. Non-Catalytic, Catalytic, and Pellet Stove Emissions (HPBA Data)

Rank

Type

EPA M28 

Weighted

Cat. / Non. Cat Avg. Emissions

or Pellet g/hour

1 Non-Cat 0.70

2 Non-Cat 0.80

3 Cat. 0.80

4 Pellet 1.00

5 Cat. 1.10

6 Pellet 1.10

7 Pellet 1.10

8 Non-Cat 1.10

9 Pellet 1.15

10 Pellet 1.20

11 Pellet 1.20

12 Pellet 1.30
9

-10

13 Non-Cat 1.30

14 Cat. 1.30

15 Cat. 1.35

16 Non-Cat 1.40

17 Cat. 1.40

18 Pellet 1.40

19 Pellet 1.40

20 Non-Cat 1.50

21 Pellet 1.50

22 Non-Cat 1.60

23 Pellet 1.60

24 Pellet 1.60

25 Pellet 1.60

26 Cat. 1.60

27 Pellet 1.67

28 Pellet 1.70

29 Pellet 1.80

30 Non-Cat 1.89

31 Non-Cat 1.90

32 Cat. 1.90

33 Non-Cat 2.00

34 Non-Cat 2.00

35 Pellet 2.00

36 Cat. 2.00

37 Non-Cat 2.00

38 Cat. 2.10

39 Non-Cat 2.10

40 Cat. 2.10

41 Non-Cat 2.10

42 Pellet 2.20

43 Non-Cat 2.30

44 Pellet 2.30
9

-11

45 Cat. 2.40

46 Cat. 2.40

47 Non-Cat 2.40

48 Non-Cat 2.40

49 Non-Cat 2.40

50 Non-Cat 2.43

51 Non-Cat 2.50

52 Cat. 2.50

53 Non-Cat 2.60

54 Non-Cat 2.60

55 Non-Cat 2.60

56 Pellet 2.60

57 Non-Cat 2.70

58 Non-Cat 2.70

59 Non-Cat 2.70

60 Non-Cat 2.70

61 Non-Cat 2.88

62 Non-Cat 2.90

63 Non-Cat 2.90

64 Non-Cat 2.90

65 Non-Cat 2.90

66 Non-Cat 3.00

67 Non-Cat 3.00

68 Non-Cat 3.00

69 Non-Cat 3.00

70 Non-Cat 3.01

71 Non-Cat 3.06

72 Non-Cat 3.10

73 Pellet 3.10

74 Non-Cat 3.10

75 Pellet 3.10

76 Non-Cat 3.10
9

-12

77 Non-Cat 3.10

78 Non-Cat 3.10

79 Non-Cat 3.20

80 Non-Cat 3.30

81 Non-Cat 3.35

82 Non-Cat 3.40

83 Non-Cat 3.40

84 Non-Cat 3.40

85 Non-Cat 3.40

86 Non-Cat 3.47

87 Non-Cat 3.50

88 Non-Cat 3.50

89 Non-Cat 3.50

90 Non-Cat 3.50

91 Non-Cat 3.60

92 Non-Cat 3.60

93 Non-Cat 3.60

94 Non-Cat 3.60

95 Non-Cat 3.60

96 Non-Cat 3.60

97 Non-Cat 3.60

98 Non-Cat 3.70

99 Cat. 3.70

100 Non-Cat 3.71

101 Non-Cat 3.72

102 Non-Cat 3.80

103 Non-Cat 3.80

104 Non-Cat 3.80

105 Non-Cat 3.90

106 Non-Cat 3.90

107 Non-Cat 4.00

108 Non-Cat 4.00
9

-13

109 Non-Cat 4.00

110 Pellet 4.00

111 Non-Cat 4.10

112 Cat. 4.10

113 Non-Cat 4.10

114 Non-Cat 4.10

115 Non-Cat 4.18

116 Non-Cat 4.19

117 Non-Cat 4.20

118 Non-Cat 4.20

119 Non-Cat 4.20

120 Non-Cat 4.30

121 Non-Cat 4.30

122 Non-Cat 4.31

123 Non-Cat 4.40

124 Non-Cat 4.40

125 Non-Cat 4.40

126 Non-Cat 4.40

127 Non-Cat 4.40

128 Non-Cat 4.50

129 Non-Cat 4.50

130 Non-Cat 4.50

131 Non-Cat 4.70

132 Non-Cat 4.80

133 Non-Cat 4.80

134 Non-Cat 5.10

135 Non-Cat 5.20

136 Non-Cat 5.30

137 Non-Cat 5.50

138 Pellet 5.50

139 Non-Cat 5.90

140 Non-Cat 6.00
9-14

141 Non-Cat 6.00

142 Non-Cat 6.10

143 Non-Cat 6.90

144 Non-Cat 7.30

145 Non-Cat 7.50

Table AA-2. Catalytic Stove Emissions (HPBA Data)

Rank

Type

EPA M28 

Weighted

Cat. / Non. Cat Avg. Emissions

or Pellet g/hour

1 Cat. 0.80

2 Cat. 1.10

3 Cat. 1.30

4 Cat. 1.35

5 Cat. 1.40

6 Cat. 1.60

7 Cat. 1.90

8 Cat. 2.00

9 Cat. 2.10

10 Cat. 2.10

11 Cat. 2.40

12 Cat. 2.40

13 Cat. 2.50

14 Cat. 3.70

15 Cat. 4.10
9-15

Table AA-3. Pellet Stove Emissions (HPBA Data)

Rank

Type

EPA M28 

Weighted

Cat. / Non. Cat Avg. Emissions

or Pellet g/hour

1 Pellet 1.00

2 Pellet 1.10

3 Pellet 1.10

4 Pellet 1.15

5 Pellet 1.20

6 Pellet 1.20

7 Pellet 1.30

8 Pellet 1.40

9 Pellet 1.40

10 Pellet 1.50

11 Pellet 1.60

12 Pellet 1.60

13 Pellet 1.60

14 Pellet 1.67

15 Pellet 1.70

16 Pellet 1.80

17 Pellet 2.00

18 Pellet 2.20

19 Pellet 2.30

20 Pellet 2.60

21 Pellet 3.10

22 Pellet 3.10

23 Pellet 4.00
9-16

24 Pellet 5.50