EPA watchdog issues second stinging report on the EPA’s wood heater program

The EPA’s Office of Inspector General found continued lack of enforcement of the EPA wood heater regulations, more than a year after its first major investigative report found similar issues. Unlike that in-depth report, this new report cites very specific details of instances where manufacturers and labs have violated EPA regulations.  It found that even when the EPA knew of significant violations, it did not take action to correct the problem.  

The wood heater manufacturing and test lab industry is a collegial community where members rarely publicly criticize other members, even when major violations of the EPA regulations are widely known. However, manufacturers often relay private complaints about their competitors to the EPA, putting the EPA on notice of a wealth of compliance issues.

“We call on EPA leadership to provide more resources toward the wood stove program and address systemic enforcement issues,” said John Ackerly, President of the Alliance for Green Heat. “Its also vital for the public to know that pellet stoves are not involved in much of this controversy and that many wood stove manufacturers make good products, follow the law and are being undercut by those who knowingly skirt regulations,” Mr. Ackerly said.

Over the last 15 years, the only entity that has consistently published specific instances of non-compliance is the Alliance for Green Heat (AGH) in its monthly newsletter, and on its website.  Like the EPA, AGH is often contacted by industry members who are troubled by the conduct of other members.  The OIG listed five instances of abuse that the EPA overlooked and failed to take sufficient action, but there are scores more.  For instance, the internet continues to be rife with the sale of uncertified wood heaters, including outdoor wood boilers, which the EPA has known about for years, and appears not to have done anything.

  

US Stove sold 4,321 stoves before they were certified

This week’s report from the OIG follows up on several high-profile cases that AGH has pressed the EPA to address, including widespread fraud at US Stove Company which the EPA has been silent on for 5 years. In that case, an employee of US Stove was outraged and blew the whistle on his company.  US Stove then sued the whistleblower, getting a Temporary Restraining Order (TRO) against him to shut him up, which the local Tennessee court said was “in the public interest.” 

 This week’s OIG report described how US Stove manufactured and sold 4,321 stoves before they were certified, and d859 of them were sold even before the test lab started testing the unit. Though the EPA had all of these details, it did lead to further action.

The stove in question was never officially recalled by the Consumer Product Safety Commission.  A list of wood and pellet stove recalls can be found here.

A second whistleblower came forward, providing extensive details of fraud to the EPA, imploring them to take action.  That person wrote: “To those of us who refused to cooperate with this fraud [at the US Stove Company], we had hoped that the EPA would step in, enforce its regulations, and thus provide some level of protection and dignity to whistleblowers. I expect US Stove may come after me, and possibly file a lawsuit against me, as they did with the first whistleblower. The company has dragged that man through the mud, and forced him to hire expensive lawyers, just because he was willing to stand up for EPA regulations.”

False advertising of efficiency

Another major issue that AGH has pursued over the years is false or misleading advertising of efficiency levels, often telling consumers that the unit is eligible for the IRS tax credit, which requires stoves to be 75% efficient, using the higher heating value (HHV). In one case, a test lab listed the stove at 70% efficient, but the manufacturer told consumers it was 75% efficient and eligible for the tax credit. The EPA sent the manufacturer a cease-and-desist request via email, which the manufacturer did not act upon.  The OIG report said the EPA could have revoked the certification of the stove but has not taken further action.  

 

False and misleading efficiency advertising was widespread up until 2021, when most manufacturers began to advertise the efficiency as reported by test lab, and listed in the EPA database of certified stoves. US Stove continued to falsely represent some of its units and declined to comment on the record. Stove Builder International, a large Canadian manufacturer insists that various interpretations of efficiency were acceptable until and unless the IRS defined “efficiency” more clearly. For example, some experts argue that if a stove reaches 75% efficiency on any official test burn, it can qualify even if the average efficiency of all four burns is less than 75%.

 

While the OIG vigorously raises the issue of false advertising of stove efficiencies, it is far from clear whether OECA even believes it has the authority to address efficiency.  Efficiency testing became mandatory in 2020 but the EPA began listing efficiencies in 2012. The EPA does not regulate efficiency, as most European countries do, allowing stoves as low as 51% efficient to be certified.

 

EPA lab served as own third-party certifier

One of the 5 incidents of concern in the OIG report included an EPA approved lab serving as its own third-party certifier of a test report it has produced.  Again, the EPA knew about this but did not revoke the certification and “the lab remained approved by the EPA.”  

 

Test labs are allowed to be third party certifiers and most of them are.  However, they cannot certify the results of stoves tested in their own lab.  PFS-TECO, Intertek, OMNI, RISE (Sweden) and SZU (Czech Republic) are both test labs and third-party certifiers.  PolyTest (Canada), ClearStak and the Danish Technological Institute are approved test labs but are not third-party certifiers. 

 

Deviation from test methods

A fourth concern raised by the OIG, which has already been resolved, involved Lamppa manufacturing who makes Kuuma wood furnaces.  Lamppa had obtained an alternative test method, but the test lab deviated from that method, due to complications.  The manufactured disclosed the deviation and explained why, and the EPA certified it anyway.  After 5 years, the EPA informed Lamp it would not recertify the unit, and Lamppa had to retest and recertify the unit.  

 

Recommendation to the EPA

 

The OIG listed several significant recommendations, some of which could be incorporated into the next set of wood stove regulations, known as New Source Performance Standards (NSPS), which the EPA is currently working on.

 

·      Including a federal criminal false statement clause into the wood heater certification application process, which would require manufacturers, but not necessarily retailers, to not make false statements in their advertising.

·      Develop procedures to revoke the approval of test labs that do not follow NSPS requirements.

·      Develop procedures to revoke the certification of wood heaters that do not coply with NSPS requirements.

·      Inform the OIG of investigations into fraud or abuse of the wood heater NSPS.

 The  OIG report can be found here. 

AGH calls for limited, targeted sell-through of stoves

Residential Wood Heating New Source Performance Standards Testimony of John Ackerly
Alliance for Green Heat
Monday, June 8, 2020

Good morning.  My name is John Ackerly and I am the President of the Alliance for Green Heat.  We are a 501c3, non-partisan, non-profit organization based in Maryland.

Thank you for holding this hearing.  We will add to this testimony in our written remarks.

Let me start by saying that we support a partial, limited sell-through, but not one that will result in more Step 1 units coming from manufacturers into the retail market. That would backfire.

There is a way to do this proposed sell-through in a smarter, more targeted way.  And there is a way to do it that will add too much wood smoke into communities and neighborhoods.

One of the roles of AGH is to bring greater transparency to the wood heating community.  In the next 2 – 3 minutes, we’d like to talk about details that the EPA may not have considered.

We sympathize with many of the small retailers who still have some Step 1 appliances.  Their predicament is partly or in some cases mostly because manufacturers could not or did not get them Step 2 appliances early enough.  

Manufacturers had 5 years and that was enough time.  Now it’s the retailers turn. We do not think manufacturers should be able to sell or ship Step 1 units during a sell-through period unless the manufacturer is also the only retailer and they do not use any other retailers.  

On the EPA’s website, you say that  “the proposed amendments, if finalized, would provide retailers more time to sell Step 1-certified residential wood heating devices.”  Please stick to your word and only consider a sell-through for retailers, and not use this as a back doorway for manufacturers to keep moving Step 1 units into the market.

Many manufacturers held off producing and selling their certified Step 2 products until 2019, thinking or just hoping that there would be a sell-through.  If you happen to be a dealer who sells mostly those lines of stoves, you were put in a bad spot. 

HPBA has been a good partner to EPA insofar as they have helped educate retailers about the EPA regulations.  But their policies are more driven by manufacturers and in 2019 they were still urging retailers to buy Step 1 products to help out manufacturers.  They said, and I quote “Manufacturers need that revenue to complete testing and certification of Step 2 products.  Remember, you still have one full selling season between now and the Step 2 deadline.” (unquote)  

Hundreds of retailers tried to stop buying Step 1 appliances but some of the manufacturers that they sold for, pressured them to keep buying Step 1 units.  

The second way that the EPA can make this a smarter, targeted sell-through is to limit it to stoves and not allow central heaters.  Step 1 units central heaters have the potential to be far more polluting than Step 1 stoves.  If the EPA is concerned with air quality implications of a sell-through, the best way to allay those concerns is to focus on stoves, not on the appliances that have biggest fireboxes and the biggest potential to cause excessive smoke – and the worst reputation in the industry.

In the upper Midwest and great lake states, hundreds or thousands more Step 1 central heaters could be installed in communities that already have too many cheaper, polluting outdoor boilers and warm air furnaces.  Its patently unfair for companies like Lamppa Manufacturing and Fire Chief, who are even smaller than their competitors who did not design a Step 2 unit. They deserve to recoup their investments to design and certify Step 2 furnaces, not to be undercut by the EPA.  They followed your rules and your timelines and now you should not penalize them for that and reward the companies that fought your rules and thought they would not have to comply on May 15.

Out west many communities and valley towns that experience severe weather inversion where wintertime wood smoke get trapped close to the ground.  These are the areas that most needed Step 2 appliances and that don’t need cheaper, more polluting Step 1 stoves to be competing in the marketplace for yet one more heating season.  In anticipation of this likely sell-through, we urge those communities, starting with Fairbanks Alaska to adopt rules, if they haven’t already, that do not allow more Step 1 sales or installs.

AGH also calls on the EPA to publicly recognize states and local jurisdictions that may not allow the sell-through.  

The third way to make this a smarter, more targeted sell-through is to limit the time period to as little as 4 weeks, but no more than 8 weeks.  Retailers lost 2 very slow months due to Covid – 19 and the EPA is proposing to replace that with months during the peak of the selling season.  

Currently, an informal sell-through is already happening as hundreds of retailers use different methods to offload Step 1 stoves.  If anyone wants to go to eBay today or tomorrow, you will find hundreds of new stoves listed. (You need to double check the model numbers to see which ones are Step 1, which can be confusing.)  Craigslist is another outlet used by retailers, some of whom are still listing 4 or 6 new Step 1 units.  You can also find new, completely uncertified stoves online.  

Some may ask, why does the EPA need to propose a sell-through, when EPA enforcement is not tangible enough to stem this informal and illegal sell-through that has been occurring since May 15.  Will there be another informal sell-through after Nov. 31?  If EPA is going to allow a sell-through, it needs to do a much better job at showing that it can and it is willing to do certain types of enforcement.  Otherwise, we will just have a much longer period where some player comply and others are in continual, open non-compliance.

In closing, we want to say that because of EPA testing regulations, America probably makes the best wood stoves in world.  We lag behind in wood boiler technology and we are not the only leaders in pellet stove technology.  But with wood stoves, we probably have the strictest testing standards.  For the next NSPS, we should not be looking at reducing PM levels below 2 grams an hour without first getting a federal test method that requires cord wood fuel and is based on real world burning habits.  Thankfully, we now may be on track to undertake that, now that the 2020 deadline has basically remained intact, despite this likely sell-through window.  

We also urge the Office of Air & Radiation to recognize the carbon benefits of small high efficiency wood and pellet heating.  The Achilles heel of biomass to electricity is the low efficiency leads to more carbon emissions per unit of energy.  The Achilles heal of residential biomass is the particulate matter, not the carbon.  So if we can get better test methods that will lead to redesigned and genuinely cleaner stoves, we will be world leaders in residential wood stove technology.

Related stories

EPA proposal to relax wood stove rules sows division between states and industry – and between industry factions (May 2020)

EPA urges manufacturers to stick to May 2020 compliance deadline (Oct. 2019)

EPA proposal to relax wood stove rules sows division between states and industry – and between industry factions

Some states may disallow sell-through, but selling-through has already begun

Rep. Peterson (D-MN) seen here with
constituent Dennis Brazier of Central
Boiler, was the strongest advocate for
a sell-through in Congress.

Updated: Oct. 28, 2020 - The EPA proposal to relax the Obama-era timeline for wood heater emission compliance is setting up another showdown between the stove and boiler industry and states and air quality agencies.  At issue are sales of more polluting wood stoves and wood boilers.  The far cleaner pellet stoves and pellet boilers, favored by some states as an important renewable alternative to fossil fuel heat, are not as contested.

The sell-through was expected to be at least for 2 months, most likely October and November but as of the end of October, the EPA had still not announced whether it would approve a sell-through and it may not be likely that any announcement will be before mid or late November, leaving barely a month  before the end of the year.

While many European countries are moving forward with incentives for pellet stoves and boilers as part of a broader policy to reduce fossil fuels, the US wood heating community is embroiled in fights about whether the dirtiest cordwood appliances should get a new lease on life.  The main wood heat industry association, the Hearth, Patio and Barbecue Association (HBPA) also represents gas appliances, so it is not making the case that these wood and pellet heaters are a low-carbon, renewable technology.

The stakes are not as high as they were in 2017 when Congress nearly passed a 3-year extension to stove and boiler emission deadlines, or in 2018 when the EPA proposed a full two-year sell-through.  But the way this sell-through proposal finally emerged is opening old wounds, not only between industry and states, but also within industry.  It led to the two highest volume stove manufacturers leaving HPBA and left the association without a meaningful victory during Trump’s presidency.

The EPA has opened the public comment period on whether to allow a window in the fall to sell now out-of-production higher emitting Step 1 stoves that were scheduled to be illegal to sell after May 15. The EPA will also host a virtual public hearing on June 8 to solicit input.  Most experts believe some fall sell-through period is extremely likely but its length and potentially some smaller details still hang in the balance.  In the meantime, hundreds or possibly thousands of non-compliant new wood stoves and boilers continue to be openly advertised and sold across America two weeks after the stricter EPA standards took effect.

While many retailers and manufacturers took the May 15 deadlines seriously, some continue to advertise and/or sell Step 1 heaters on their websites, showroom floors, or through Craigslist, eBay and other sites.  EPA has made enforcement a low priority which does not preclude letters and visits by EPA enfrcement. HPBA has also been consistently educating retailers about how to comply with the new regulations.  In addition, HPBA has been reminding both manufacturers and retailers that even though the EPA may not very active at higher level enforcement, state and local authorities can still be active.

HPBA has continually
updated its education
effort for retailers.

Industry highlights mom and pop hearth stores in their advocacy efforts to get a sell-through, but the needs and goals of manufacturers is the crux of the problem.  Mom and pop stores still have Step 1 stoves as a result of the many different relationships that they have with manufacturers, some of whom pressured them to keep buying Step 1 stoves, some of whom didn’t even have Step 2 stoves until recently – and some who were ahead of the curve and started selling Step 2 stoves in 2018.  

Some manufacturers still really need the sell-through because they have unsold inventory of Step 1 stoves, boilers, and furnaces and may have to buy back many thousands of Step 1 appliances.  Five years lead time could have been enough, but there was a widespread belief that the 2020 deadline would not stick under a Trump administration.  As late as the winter of 2020, some manufacturers were still in disbelief that their industry association didn’t get any significant results in the courts, Congress, or with the administration.  

Conversely, the good news for the progressive pellet and wood heating community is that the Obama-era regulations are still intact, 5 years after they came into force.  Pellet stoves and boilers are

2020 compliant pellet stoves show a
strong correlation between lower 
PM, lower CO and higher efficiency.

significantly cleaner and more efficient not just in test labs, but in the homes of more than a million families, many of whom want them not just to save money, but to stop paying a heating bill to multinational oil companies.

The stakes are not as high for some New England states like Vermont that have been giving hefty incentives to mostly European designed, clean burning pellet boilers and don’t experience severe weather inversions that trap wintertime pollution close to the ground. (Vermont and other other New England states do experience regular, more localized inversions in valleys.)  But a potential sell-through of dirtier cordwood appliances represents a greater threat for West Coast communities struggling with excessive wood smoke from California’s central valley to the Canadian border.

Nowhere is the sell-through more controversial than in the warm air furnace sector, where two small companies with Step 2 compliant units would be significantly harmed by an initiative enabling a larger manufacturer to sell their older, higher polluting units.  

The stakes may the highest for upper mid-west states like Minnesota where outdoor wood boilers are

On per capita basis, wood smoke
concentrations are highest in states
with more outdoor wood boiler
installations like Wiconsin and
Michigan.

as popular as they are controversial, having subjected hundreds of towns and neighborhoods to excessive smoke.  A sell-through could result in hundreds of additional Step 1 boiler installations that will continue to emit heightened levels of smoke for a decade or more.  Warm air furnaces are also higher sellers in Mid-Western states, as they experience some of the coldest weather in the country. 

Minnesota is home to Lamppa Manufacturing, a small Step 2 warm air furnace manufacturer that is vehemently against any sell-through, as their company would suffer if Step 1 furnaces were allowed to come back on the market.  Lammpa Manufacturing is not a HPBA member because it and other manufacturers like Woodstock Soapstone oppose HPBA’s history of advocating for more lax standards for outdoor wood boilers and stoves.

EPA adds to confusion

On May 20, EPA Administrator Wheeler defended the proposed sell-through at a Senate hearing, adding to the confusion and myths about wood heaters.  The Administrator mistakenly said that the EPA is only proposing to allow stoves to be sold that we allowed by the 2015 standards and  “we’re not talking about standards that are 20 or 30 years old.”  But 90% of stoves met the 4.5 gr/hr. standard when Washington State adopted that standard in 1995.  The EPA adoption of it in 2015 barely moved the needle at all and allowed stoves tested as far back as 1990 to remain on the market.

The Administrator also incorrectly told the Senate Committee that most retailers sell off their

Administrator Wheeler's performance
at a recent Senate Hearing showed limited
understanding of sell-through details.

inventory in the spring.  In actuality, the spring is the slowest sales period of the year and the Coronavirus shutdown disrupted sales (though far less than industry claims). Administrator Wheeler further added to the confusion by implying that it was the manufactures who were most imperiled because they had to buy back unsold stoves from retailers.  

Meanwhile, the EPA’s Office of Enforcement, OECA, has not designating Step 1 heaters as “Out of Production” but says that they are in the process of changing their database.   The Alliance for Green Heat (AGH) believes that all out-of-production stoves should be consistently designated, and the EPA should not be operating under the assumption that there will be a sell-through until one is formally approved.  (The EPA made this change to their list 2 months after this blog was initially posted.)

The EPA database of certified stoves is also riddled with errors and omissions but it remains a vital resource for states, air agencies manufacturers, retailers, consumers.  Many of the errors are minor and its important to note that the EPA maintains this database as a public service, not because it is legally required to do so. If the certification of a unit, or other details are in doubt, the most authoritative document is the certication test report that manufacturers are required to post on their websites.  Moreoever, some stoves may be fully certified but not appear on the EPA's database.  It may take up to 40 days for the EPA to post an appliance on their database after it is certified because manufacturers are required to email the EPA showing the link where they have posted their test dart on their website before the EPA adds them to the database.  This helps ensure that manufacturers comply with the requirement to be transparent about their testing, which manufacturers used to keep confidential prior to 2015.   

Dispute over $75 million change-out fund and one-year sell-through offer

During the May 20th Senate hearing, both Administrator Wheeler and Senator Capito (R-WV) took

Senator Carper (D-DE) has become the
leading voice in the Senate for stricter
wood heater emission standards.

aim at Senator Carper (D-DE), noting that he had previously supported a sell-through but now opposed it.  The day before the hearing, Jack Goldman of HPBA sent a letter highlighting this supposed contradiction, and the main reporter following this issue, Sean Reilly, called it a “flip-flop” by Senator Carper.   But the attempt to embarrass Carper may have backfired as it brought back a controversial chapter in this saga into the limelight.

Senator Carper introduced a bill in 2018 that would have established a $75 federal change out fund and provided a one-year sell-through.  Although the bill was historic opportunity to get both a sell-through and a significant fund to subsidize the sale of wood stoves and boilers.  HPBA refused to support it at the time because it would have also codified Step 2 emissions limits as of May 2020, and the association still thought they could roll back much of the 2015 New Source Performance Standards (NSPS), or at least delay by three years.  Only in retrospect can the wood heater industry appreciate what an opportunity Carper’s amendment was, and how little industry ended up securing in subsequent years.  HPBA’s decision to try for a three-year extension instead of a one-year sell-through and a $75 million change-out fund may have exposed differences between central heater manufacturers who really needed a three-year delay, stove manufacturers who were already meeting Step 2 emission standards, and retailers who would have been a main beneficiary of a large change-out fund.

This moment may have represented industry’s high point in influence in Washington but the moment was squandered and such an opportunity has never come back.

AGH asked HPBA how decisions about wood heater policy are made within the organization. Jack Goldman, CEO of HPBA responded in writing that, “All policies of HPBA go through the appropriate internal approval process that includes staff, committees, sections, and leadership.”  HPBA members interviewed for this story say that policy is normally set by the Solid Fuel Hearth Appliance Section and that central heater companies do not have any inordinate influence but HPBA must represent all its members, even if that means working for “the lowest common denominator.”  One HPBA member who was distressed by HPBA’s lack of support for Carper’s amendment said they did not recall any vote on that policy decision, and that there was a lot of inconsistency on what matters were voted on, and what was decided by HPBA government affairs staff.

In hindsight, industry would have benefited far more from Senator Carper’s amendment. At the time, however, industry felt that, between Congress, the courts and the Administration, they still had lots of cards to play, according to industry members interviewed for this blog.  Industry had the opportunity to promptly litigate the legality of the 2015 NSPS but instead chose to delay litigation and take their grievances to Congress and the Administration.  Briefs for the court challenge are due in August but it is unclear if there is anything meaningful left to litigate other than some technical issues that don’t implicate timelines and emission standards.  It’s also unclear how much appetite manufacturers have for litigation if it needs to be funded with assessments in addition to normal membership dues.

States and programs that may not allow the sell-through

A number of states, such as Minnesota, may have incorporated the 2015 NSPS and its 2020 timetable into their state laws even before they anticipated a sell-through and thus cannot allow a sell through per state law.  New York has publicly said that a sell-through may violate state laws, leaving open the question whether retailers can safely sell Step 1 appliances in the Empire state.  Most change out programs and incentive programs that account for potentially up to 15% of annual stove sales only make Step 2 units eligible.  Some of those programs operate with funds tied to the EPA that could not be redirected toward Step 1 stoves.  

In addition, it’s unclear if the sell-through will be allowed in parts of Canada that have expressly adopted the 2015 NSPS.  The provinces of Quebec and British Columbia, home to a third of Canada’s modest 37 million population (less than California’s) adopted the 2015 NSPS.  It’s also unclear if local jurisdictions, including major urban areas, could disallow a sell-through.  Depending on the number of states that reference the 2015 NSPS deadlines, there may emerge a patchwork of regulations disallowing the sell-through.  This kind of patchwork is often what all industries try to avoid, as it makes commerce more difficult.

Central heater manufacturers spearhead the fight for relief

Central wood heater companies appear to have played an outsized role in the effort to delay the EPA’s wood heater deadlines, frustrating HPBA members who would rather have leaders of companies with more modern technology be the face of industry.  Frank Moore, President of Hardy Manufacturing, a Mississippi based outdoor wood boiler company, represented the wood heater industry at a Senate hearing in 2017.  However, Hardy Manufacturing had no intention of making a Step 2 heater and has since gone out of business.

As recently as February of 2020, HPBA said they “invited two HPBA members – Central Boiler and U.S. Stove Company” to a private meeting with officials at the Office of Information and Regulatory Affairs (OIRA), which is part of OMB.  These two companies dominate the outdoor boiler and warm air furnace markets.  It is unclear why HPBA invited them to the meeting.  AGH asked HPBA why they invited those two companies to this meeting, and in a written response, Jack Goldman said, “we do not discuss internal deliberations as to how we make such decisions.”

   

The appearance that HPBA policy was being driven more by the needs of companies making central boilers caused considerable friction within industry.  One HPBA member, who asked that his name not be used, said that some companies did not renew their membership in HPBA in 2020 because the “NSPS assessment fees are not in the interest of the company,” referring to the fees manufacturers paid to fight the EPA’s 2015 NSPS.  The initial success of HBPA’s advocacy efforts, which led to a proposed 2-year sell-through for central heaters but not for stoves, was a deep disappointment for some HPBA members that only made stoves.

The February meeting left a paper trail on the record, giving insight into the number of Step 1 central heaters these larger manufacturers have in their own warehouses. John Vorhees, Director of Compliance for US Stove Co., said in a memo to the EPA that, “We, as a manufacturer are also stuck with inventory. We currently have $730,000 of WAF and $670,00 of AAA products.” (WAF stands for warm air furnaces, regulated under Subpart QQQQ of the NSPS, and AAA refers to stoves, which are regulated under Subpart AAA of the NSPS.)

"Thank you Congressman Peterson" says a
sign held by Central Boilers employees in

2017, after Peterson  introduced HR 453

Central Boiler did not disclose in their memo that they had any Step 1 boilers in their possession but said that 210 of their dealers had 596 Step 1 boilers, or an average of 2.8 boilers apiece.  Oddly, the memo does nothing to explain how many Step 2 boilers those dealers have, or when the company stopped selling Step 1 boilers to their dealers and started helping them stock up on Step 2 boilers.  As a result, this memo, like scores of other comments submitted to the EPA in support of a sell-through, fails to provide the EPA with the kind of data that demonstrates a sell-through was warranted and that manufacturers acted timely and in good faith to provide Step 2 heaters to retailers.

The 2018 EPA proposal for a 2-year sell-through for boilers and furnaces, but not for stoves, would have extended the sales of the most polluting units the wood heater industry had to offer.  The irony was not lost on many in the stove industry, who privately complained that it was the outdoor boilers who brought on stricter scrutiny from state and federal air quality agencies in the first place.  Now, they were being teed up to get relief. But the plan stalled, and the EPA public comment process resulted in a denial of the sell-through for central heaters, which they unofficially announced in November 2019.  

After industry failed to secure a two-year sell-through that would have allowed them to build up a two-year inventory of Step 1 heaters, US Stove Company laid off 25% of their workforce and also dropped their membership in the HPBA.  England Stove Works also dropped their membership but reportedly did not have any such large-scale layoffs. These two companies are by far the largest volume stove manufacturers in the US, as they sell to big and small hardware chain stores and have buy-back agreements.  

Hardware chains such as Home Depot,
Lowes, Menars, Habor Freight Tools,
Northern Tools and  True Value, sell
the majority of stoves in some areas.

There has long been tension between US Stove Co, England Stove Works and the makers of more expensive stoves that get sold through specialty stove retailers.  US Stove Co and England Stove Works have always offered EPA certified stoves for under $1,000 and rarely sell stoves that cost more than $2,000.  After the 2008-09 recession, these companies picked up a larger slice of the stove market, putting more pressure on specialty hearth stores whose stoves often start at $2,500 and can go up to nearly $5,000.  Brandon Barry of US Stove Company told AGH that "we have tried in all instances to maintain similar price points in the marketplace, even with increased cost on our 2020 models, leaving those stoves as some of the most cost effective for consumers in the market."

Similarly, when the cleanest and most efficient wood pellet boilers are being sold for $10,000 - $20,000, US Stove arguing for a 2-year sell-through told the EPA that, “We have determined and experienced if a forced-air furnace is priced at retail beyond $1,500, the consumer looks for alternative models or appliances with different heating sources (i.e. electric, gas, geothermal, and etc) for their central heating requirements. It is important to note we are the largest producer of wood burning forced-air furnaces in the industry.”  In addition, Brandon Barry of US Stove told AGH that "record low fuel prices were and still are a driving factor of not introducing a furnace for this year."

The EPA’s low priority enforcement policy

The EPA has adopted a more low priority enforcement approach across a broad range of regulated industries.  With wood heaters it has appeared to be somewhat low-priority for many years, far before the Covid-19 pandemic.  The EPA is not expected to engage retailers who continue selling Step 1 appliances, but HPBA has still doggedly implored them to abide by the legal timeline and avoid any possibility of infractions. 

Acme and EZ Boiler do not advertise
their units as commercial only

The EPA’s lack of enforcement may be most pronounced by the continued open sale of uncertified outdoor boilers and furnaces.  Several outdoor boiler and warm air furnace companies still brazenly ignore EPA laws and operate with apparent impunity.  Companies like Acme Furnace Co based in Missouri, EZ Boiler based in Michigan and Hyprothermboiler based in Arkansas continue to make uncertified residential wood boilers and furnaces.  We are not aware of any EPA enforcement activity despite being contacted numerous times in recent years.   

Follow the money

HPBA is a small industry association by Washington standards with about a $6 million-dollar budget.  HPBA emerged from the Wood Heating Association founded in the 1970s during the wood stove boom years.  It later merged with the barbecue industry association, but barbecue manufacturers only pay a fraction of the dues that hearth industry manufacturers pay.  Three quarters of HPBA’s revenue comes from its annual Expo and only 22% from membership dues.  The loss of membership dues from US Stove Co. and England Stove Works may be less significant than the loss of revenue from them buying booth space at the annual Expo, but since they don’t sell to independent hearth retailers, their motivation to have a booth at the Expo is not as important as other stove manufactures that rely on small retailers.

Retailers are members of regional HPBA affiliates and do not pay dues to the national HPBA, even though affiliates share a small amount of retailers membership dues with the national HPBA.  Test labs also pay dues to regional affiliates based on their income, ranging from a high of $1,050 for Omni Test Labs to $350 for Intertek, each year.  (AGH is also a member and pays a non-profit rate of $350 per year.)  Between membership dues and fees for manufacturers and renting booth spaces at the Expo, HPBA remains mostly a manufacturer-driven industry association.

The Solid Fuel Section of HPBA is the committee that “promotes and protects the interests of HPBA members that produce wood and pellet hearth appliances,” according to the HPBA website.  The Section also funds specific legislative, regulatory, and consumer initiatives.  If the Section votes to litigate or pursue Congressional legislation, the effort is funded through a special assessment based on the size of each company in the Section, not by barbecue or gas section members.  Some companies resisted expensive efforts to undermine or stall the NSPS, but still had to pay the special assessment, and others refused to pay any more special assessments after the EPA’s only proposed a sell-through for central heaters in 2018.  The 2019 assessment for additional NSPS advocacy approved by the Solid Fuel Section was reportedly less than $100,000, but previous years may have been much higher.

The March 2020 Expo in New Orleans was nearly cancelled but carried on with smaller attendance.  This was the first Expo to showcase all 2020 compliant appliances and was notable that the only two stoves considered for Vesta awards were both automated.

The annual HPBA Expo is a networking
hub not just for industry, but also EPA and
air quality experts who attend parallel
events.

The main purpose of the annual Expo is to provide a forum for manufacturers to sell to retailers and that in turns provides HPBA with much of its annual operating expenses.  HPBA largest expense by far is putting on the Expo.  Its next largest expense is its advocacy and government affairs department, which reportedly spends nearly $1 million a year, mainly in salaries.  In addition, regional affiliates, with far smaller budgets, engage in local lobbying and advocacy.  By far the biggest issue in recent years for the Government Affairs staff has been trying to extend the 2015 NSPS deadlines and dismantle parts of it.  But increasingly HPBA and its regional affiliates are engaged in fighting against restrictions on natural gas and the electrification of heating.

It’s unclear what percentage of membership dues, assessments and booth fees companies like Central Boiler and US Stove Company pay to HPBA.  Hearth & Home Technologies, by far the largest higher end stove manufacturer in the US who owns top brands like Harman, Quadrafire and Vermont Castings, already pulled out of HPBA’s annual Expo several years ago, which was an even bigger financial blow to HPBA.   It’s unclear if the departure of US Stove Co will help other factions regain more clout and leadership within HPBA.

Companies making and supporting some of the cleanest, most efficient, and most automated wood heating technologies have formed a smaller trade association, Biomass Thermal Energy Council (BTEC), that initially broke off from the Pellet Fuel Institute (PFI) so it could more aggressively fight for modern pellet heating policies in Washington DC.  (AGH is also a member of BTEC and its President John Ackerly is on the Board of BTEC.)

Impact of sell-through sales of Step 1 appliances

The proposed sell-through would clearly benefit some companies and reduce the sales of others.  Manufacturers that took the deadline seriously would have to compete with those who were counting on an extended timeline and can now offer cheaper or more discounted products.  Some retailers who cleared out their Step 1 products also would be unhappy with the sell-through for this reason, but the majority who have some Step 1 stoves left support it.  Retailers that have no Step 1 stoves could also buy more from manufacturers who have left-over Stove 1 inventory.

For the states and air agencies opposing the sell-through, the issue has little

A smoke capturing inversion in
Fairbanks, Alaska.

to do with issues within the trade association, and everything to do with the additional pollution that will result from the sell-through.  Upper Midwestern states where central heaters are popular and Western states that have frequent inversions are struggling to determine how many more Step 1 boilers, furnaces and stoves are left to sell.  One data point causing great concern is that a relatively small number of manufactures who sell to “major home center chains, and report that over $10 million worth of product will not sell in time and must be repurchased,” according to a letter from HPBA’s Jack Goldman to EPA Administrator Andrew Wheeler.  It is not clear how much was repurchased, or still needs to be repurchased, what percent is furnaces and boilers, and how much of that could back on the market before Nov. 30.  Brandon Barry of US Stove told AGH in a written response to questions that “our inventory levels are confidential. I will say that sell through would be beneficial for us at both the manufacturing and retail level. ...  Some product came back to our location and could be sold if sell through comes to fruition. Some has already been destroyed."  Pellet Stove Parts 4 Less, a Massachusetts company said they bought more than 100 Englander Step 1 pellet stoves in April at bargain prices so they could take them apart and sell the individual parts.

The other controversial area is how much more polluting Step 1 appliances are in the field, compared to Step 2 appliances.  HPBA’s position is that Step 1 appliances are “perfectly good” and a sell-through “ultimately has a minimal impact on the environment as the products in this sell-through provision are already clean burning.”  In written answers to questions submitted by AGH, Jack Goldman added, “We certainly hope that the Step 2 appliances may be better than Step 1 products in people’s homes … EPA simply has no data confirming that there is a distinction in the field between a 2.0 g/h laboratory number and a 4.5 g/h laboratory number.” 

Emission standards for lab testing dropped by more than a
 half for stoves and even more for most boilers and furnaces.

While pellet stoves are the least concerning, as many Step 1 pellet stoves were already under 2 grams an hour, outdoor and indoor boilers, also known as hydronic heaters, have the widest differences between Step 1 and Step 2 and are likely the appliance type where there is a very appreciable emission difference.  Furnaces are even more complex as they didn’t even have a voluntary emission program prior to 2015, so they have had to go from an uncertified class of appliances very quickly.  In 2015, their Step 1 standards were ≤ 0.93 lb. of PM/mmBtu heat output but their Step 2 dropped the most drastically, all the way to ≤ 0.15lb/mmBtu heat output.  It’s hard for any wood heating combustion expert to expect that such a drastic drop in required lab certification limits would not impact emissions in the real world. 

For states and air quality agencies, there is also a much more antagonistic relationship with HPBA than there was decades ago, before this bitter fight over the 2015 NSPS.  The apparent leadership of central boiler companies within HPBA has not helped the relationship, and it will likely lead to more robust comments opposing the sell-through and a potential increase in state enforcement activity.

What comes next

US Stove Co and Englander dropped their memberships for different reasons, but the loss of their membership dues and assessments is overshadowed by a far more imminent threat to HPBA’s financial health: whether they can have the next expo in Nashville in March 2021.  The association is actively exploring whether to hold a virtual trade show but that may not provide the revenue, even after the far lower expenses, that it relies on.  Many trade associations and other groups are facing similar, longer term disruptions to the business models as a result of the Cover-19 pandemic.

NESCAUM's Lisa Rector  demonstrating
the IDC test method to EPA staff at the
2018 Wood Stove Design Challenge on
the National Mall.

Then, there is the next NSPS which could begin as soon as 2023.  Many people in industry worry that the 2 grams of PM2.5 per hour standard is just a precursor to 1 gram an hour.  But the next NSPS is likely to be far more complex and will focus on adopting an entirely new test method that may abandon measuring pollution in grams per hour, and adopt grams per unit of heat, which is the way boilers are already measured.  HPBA members have already paused development of the broadly accepted ASTM E3053 cordwood test method, that was mainly designed by the HPBA manufacturing community.  HPBA members developed the underlying data for this ASTM cordwood test, and it has become very popular, with 57 out of the 120 Step 2 wood stove models using the ASTM test.
Now the Northeast States for Coordinated Air Use Management (NESCAUM) is developing the underlying data for a series of Integrated Duty Cycle (IDC) tests, mostly with funding from the New York State Energy and Research Development Authority (NYSERDA).  The EPA informed HPBA in January that they plan to use the IDC framework as the basis of the future Federeal Reference Method (FRM), the officially designated certification test method.

The question will likely be about how much data NESCAUM releases and when, and whether HPBA feels that it has been sufficiently included in the process and ultimately whether the EPA has enough data to adopt a FRM.  The amount and quality of test data developed for the ASTM will be a reference point.  Developing test data for a test method is a lengthy and expensive process and also can become political and controversial based on who can witness testing, how much data is shared, how long it takes to share data, what new instrumentation is required, and what the next set of timelines looks like.   The process could lead to another lawsuit – and special assessments from the HPBA’s Solid Fuel Section, if manufacturers feel their ability to certify products is too unpredictable.  Alternatively, if the acrimony around this proposed sell-through diminishes, a more cooperative and inclusive process could emerge and result in a genuinely improved test method that will encourage innovation to make stoves burn well in homes, not just in labs.