Final Staff Report with Appendices

For A mendments to Rule 4308 SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DI STRICT

FINAL STAFF REPORT

December 17, 2009

Amendments to Rule 4308 (Boilers, Steam Generators, and Process Heaters– 0.075 MMBtu/hr to less than 2.0 MMBtu/hr)

Prepared by: Katy Linebach, Air Quality Specialist

Reviewed by: Saul Gamez, Air Quality Engineer Colette Kincaid, Senior Air Quality Specialist Stanley Tom, Senior Air Quality Engineer Clay Bishop, Air Quality Inspector Joven R. Nazareno, Senior Air Quality Engineer George Heinen, Supervising Air Quality Engineer Errol Villegas, Planning Manager

I. SUMMARY

A. Reasons for Rule Development and Implementation

The California Air Resources Board (ARB) and United States Environmental Protection Agency (EPA) classified the San Joaquin Valley Air Basin (SJVAB) as

severe and serious non-attainment area for the stat e and federal ozone standards, respectively. In accordance with Federa l Clean Air Act (CAA) requirements for non-attainment areas, the San Joaq uin Valley Unified Air Pollution Control District (District) adopted the 2 007 Ozone Plan to establish the strategy for attaining the federal eight-hour ozone standard. The SJVAB is also currently designated as nonattainment for the natio nal ambient air quality standard (NAAQS) for particulate matter with aerody namic diameter of 2.5 micrometers or less (PM2.5). As such, the District 's Governing Board adopted the 2008 PM 2.5 Plan on April 30, 2008.

The ozone and particulate matter attainment strateg ies are comprised of regulatory and incentive-based measures to reduce e missions of oxides of nitrogen (NOx), volatile organic compounds (VOC), p articulate matter and sulfur oxides (SOx). As a result, this rule development p roject is subject to the Code of Federal Regulations (CFR), the CAA and the Californ ia Health and Safety Code (CH&SC) requirements.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 This rule amendment project is proposed to satisfy the goals of the District’s 2007 Ozone Plan and 2008 PM2.5 Plan. The proposed amend ments to Rule 4308 will seek to obtain as much NOx, SOx, and PM emission reducti ons from the source category as expeditiously practicable, technologically feasible , and economically reasonable, as determined by the District’s Governing Board. Furt hermore, the District intends to satisfy the requirements identified in Table 1.

Table 1

Subject Reference Requirement

BACM Federal Register

8/18/94 Provisions in attainment plans should include the application of best available control measures (BACM) to existing major stationary

sources.

BARCT CH&SC 40919(a)(3)

2007 Ozone Plan Ozone attainment plan should provide for best available retrofit technology (BARCT) for existing permitted sources.

Deadlines Ozone Plan Adoption of rule amendments by the 4th quarter of 2009.

Feasible

Controls CH&SC 40914(a)(2) Ozone attainment plans should include "all

feasible control measures."

RACT CAA 182(b)(2) and

182(f) Ozone attainment plans shall assure that reasonable available control technology (RACT) for oxides of nitrogen (NOx) and VOC is in use at sources and on source categories

at or above the RACT threshold.

RACT

Threshold 70 Federal Register

30592-30596

5/26/05 The applicable RACT threshold for control

measures shall be the threshold in effect on June 15, 2004. The Districts threshold on June 15, 2004 was 10 tons per year (tpy) for

NOx or VOC.

Reductions Ozone Plan and PM

2.5 Plan Emissions reduction calculations are shown in Appendix B of the staff report.

Timeline CAA Section

172(c)(1) Ozone attainment plans shall implement control measures as expeditiously as practicable, and provide for attainment.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 B. Climate Change

The California Global Warming Solutions Act of 2006 (AB 32) created a comprehensive, multi-year program to reduce greenhouse gas (GHG) e missions in California, with the goal of restoring emissions to 1990 levels by 2020. In the coming years, ARB and the Legislature will be developing policies and program s to implement AB 32. There are many win-win strategies that can reduce both GHG an d criteria/toxic pollutant emissions. In relation to criteria pollutants, gre enhouse gases have been recognized by EPA to contribute to the air pollution, and therefo re have an impact on the public health and welfare of citizens. However, the Districts sta tutory authority dictates that criteria pollutants be addressed first while also recognizin g the impacts of greenhouse gases on

the environment.

The San Joaquin Valley Air Pollution Control Distri ct’s Governing Board adopted the Climate Change Action Plan (CCAP) in August 2008. F or CEQA, one of the goals of the CCAP is to establish District processes for assessi ng the significance of greenhouse gas impacts. The District has developed a proposed policy and proposed guidance for addressing greenhouse gases under CEQA, which will be going to the District Governing Board for approval in December 2009.

B. Description of the Project

The District’s Governing Board adopted Rule 4308 (B oilers, Steam Generators, and Process Heaters – 0.075 MMBtu/hr to 2.0 MMBtu/hr) o n October, 20, 2005. District staff is seeking to amend Rule 4308 to implement an emission control measure (SCOM-3) in the District’s 2008 PM 2.5 Plan. The con trol measure indicates that NOx emission reductions could be achieved by lowering t he NOx emission limit on boilers of this size category.

As guidelines for developing the proposed changes t o Rule 4308, District staff studied

rules from other air districts within and outside o f California. Lower NOx limits are already in place in the following rules; South Coas t Air Quality Management District (SCAQMD) Rule 1146.2 (Emissions of Oxides of Nitrog en from Large Water Heaters and Small Boilers and Process Heaters) (Amended May 5, 2006) and Bay Area Air Quality (BAAQMD) Regulation 9 Rule 6 (Nitrogen Oxid es Emissions From Natural GasFired Boilers And Water Heaters) (Amended November 7, 2007).

Rule 4308 currently is a point of sale type rule an d the source category affected would include water heater manufacturers, plumbing wholes alers, business and oil supply stores, plumbers and contractors. The proposed chan ges would continue with a point of sale rule, but lower the NOx emissions limits to 20 ppmv. A point of sale or attrition rule applies to any person who supplies, sells, offer fo r sale, installs, or solicits the installation of units with a rated heat input of 0. 075 MMBtu/hr to less than 2.0 MMBtu/hr.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 In other words, any operators of the affected units are not directly subject to the rule, but would rely on manufacturers, suppliers, contactors to sell and install units that are in compliance with the requirements of the rule. This approach will allow the District to achieve NOx reductions without placing an undo fina ncial burden on some of the operators and businesses here in the Valley.

C. Rule Amendment Process

The District’s 2007 Ozone Plan and the 2008 PM 2.5 Plan identified Rule 4308 as control measure S-COM-3 which would be implemented through the rule development process. As part of the rule development process, District staff conducted three public workshops in April 2009, July 2009, and September 2 009 to present and discuss proposed amendments to Rule 4308 and the draft Staf f Report. The Receive and File

action for this rule is scheduled for the November Governing Board Hearing with the Public Hearing to consider adoption of the proposed amendments in December 2009.

Pursuant to state law, the District is required to perform a socioeconomic impact analysis prior to adoption, amendment, or repeal of a rule that has significant air quality benefits or that will strengthen emission limitatio ns. As part of the District socioeconomic analysis process, District staff requ ested volunteers from affected stakeholders and interested parties to participate as members of the Socioeconomic Focus Group. District staff convened a meeting of the Focus Group at the time of the second workshop to assist District staff in gatheri ng information on regulatory compliance costs and business impacts resulting fro m compliance with the draft amendments. The results of the socioeconomic analy sis were published in a report and are presented along with the proposed rule amendmen ts to the public and interested parties during the final workshop.

At the workshops, District staff presented the obje ctives of the proposed rulemaking project and provided draft amendments to Rule 4308. The knowledge gathered during public workshops and the socioeconomic focus group helped District staff to accurately amend the draft rule and draft Staff Report. The comments received from the public, affected sources, interested parties, ARB, and EPA, during the public workshop process have been incorporated into the draft rule as appro priate.

The proposed rule, final draft staff report with ap pendices, and final draft socioeconomic analysis report has been published and made availab le to affected sources and interested parties prior to the public hearing to c onsider the adoption of proposed amendments to Rule 4308 by the District Governing B oard. The public hearing is scheduled to take place on December 17, 2009.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 II. BACKGROUND

A. Source Description

Boilers, steam generators, process heaters, and wa ter heaters of this size range are generally used for small business or industrial ste am or heating applications, and can be used for running small furnaces and heaters, and can either heat process fluids directly or use a heat exchange fluid. The SCAQMD e stimated the number of units, based on a unit per person ratio, to be one unit fo r every 350 people. Based on that ratio and an estimated 4.2 million people in the Va lley in 2010, the SJVAB has 17,600 units with a heat input rating between 0.075 MMBtu/ hr and 2.0 MMBtu/hr located in the

District.

During the workshops, the District solicited input from manufactures and stakeholders to establish a more refined inventory of units, but wa s unable to obtain any additional information. Because these sources are not permitte d or registered, the estimated number of units has been determined using the best available data and is used in

further calculations.

Boilers: Many boilers are used to produce steam and others provide hot water for a variety of purposes. They have three basic designs : fire tube, water tube or cast iron sectional. Fire tube boilers use combustion gasses passing through a set of tubes to increase efficiency and the temperature of surround ing water or steam. Water tube boilers use combustion gas passing over tubes fille d with water or steam to increase the surface area for quicker heating. Cast boilers pas s combustion gasses over water containing sections producing a low temperature wat er or low pressure steam. Newer types of boilers may use a heat exchanger made of c opper tubes with heat exchange

fins.

Water Heaters: Water heaters include a wide variety of designs fro m a simple tank to larger units with sophisticated controls and boiler designs. Because currently there are not enough models that meet the proposed 20 ppmv NO x limits to be considered technologically feasible for this type of unit, ins tantaneous water heaters and pool heaters are not required to meet the new 20 ppmv em ission limits but a 55ppmv

emissions limit instead.

The majority of boilers, furnaces, and heaters are used to provide comfort heating and hot water for personal use along with steam for com mercial processing needs. These units are found in manufacturing facilities, govern ment facilities, general merchandise stores, restaurants, hotels, rooming houses and cam ps, cleaning service facilities, hospitals, educational institutions, religious orga nizations, and refineries. Humidifiers are not considered to be included in this category due to technical differences in design and operation.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 Approximately 97% of the affected units are fueled by natural gas; other fuels reported were liquefied propane and distillate oil. Because fuel type is important when considering control technology, the District is foc using on natural gas units. Low NOx burners reduce NOx emissions by staging the combust ion process, which partially delays combustion. This delay results in reduced p eak flame temperatures and suppressed NOx formation. Different kinds of combu stion include Pulse combustion, atmospheric combustion and induced draft combustion

.

B. Source Category

Manufacturers have focused on combustion modificati on to meet the lower NOx limit as required in other California air districts. Combus tion modification systems are typically designed to reduce thermal NOx formation by changin g the flame characteristics to reduce peak flame temperature. Some of the design princip les used in Ultra low NOx and Low NOx burners include staged air burners, staged fuel burners, pre-mix burners, internal recirculation, and radiant burners. Burner design technology incorporated radiant burners with a premix of air and fuel to provide an even di stribution of heat combustion to lower

NOx emissions.

The technology required to reduce NOx emissions to the proposed emission limit is currently available. Most small boiler manufacture rs offer at least one model that meets or exceeds the limits proposed in draft Rule 4308. Certification results for South Coast show that manufactures have made substantial progre ss in reducing the NOx emissions for this source. In their certification tests, 46 percent of the smaller units meet the proposed limit of 20 ppmv, while 18 percent of the larger units meet the proposed limit of 20 ppmv. These test results, compiled during testi ng for the 30 ppmv certification, show the availability of the technology to accomplish th e proposed emission limits of 20 ppmv.

A boiler or water heater typically has a life span of at least a decade before it needs to be replaced. The 2007 Ozone Plan suggested that st aff consider the possibility of requiring a 10 year replacement cycle. Based on an implementation study conducted by the SCAQMD the average useful life of boilers, with a rated heat input between 0.4 MMBtu/hr and 2.0 MMBtu/hr is 15 years. The impleme ntation study does not define the average useful life of boilers, with a rated heat i nput between 0.075 MMBtu/hr and 0.4 MMBtu/hr. The Bay Area’s Regulation 8 Rule 6 consid ers the life of these units to be from 12 – 30 years. Comments from manufacturers, s takeholders, and further research point toward the useful life of units in this size category to be between 7yrs – 30 yrs. Boiler units that are older than 15 years old tend to require more maintenance and upkeep and may produce NOx emissions closer to 65 p pmv. Taking into account South Coast’s, Bay Areas, and stakeholder’s input, the Di strict estimates an average useful life of 20 years for units in this size category, which takes into account a longer life cycle of the larger units and the shorter life cycle of the smaller units.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 Currently, there are no known small gaseous-fired o r liquid-fired units that operate with

both PM2.5 and SO2 control devices. Control devices such as baghouse, electrostatic precipitators, and scrubbers are available, but the y have not yet been demonstrated or achieved-in-practice for these units. Units firing on natural gas, propane, and liquefied petroleum gas, or low sulfur diesel tend to emit ve ry low levels of PM2.5 and SO2. Because of this, Rule 4308 does not specify specifi c values for PM2.5 and SO2 reductions, however, since NOx is a PM2.5 precursor , this rule will further efforts to lower PM2.5 levels in the Valley.

III. DISCUSSION

A. Existing Rule 4308

Rule 4308 (Boilers, Steam Generators, and Process H eaters – 0.075 MMBtu/hr to 2.0 MMBtu/hr) was adopted October 20, 2005 and has not been amended since. The purpose of Rule 4308 is to limit NO

x emissions from large water heaters and small boilers. The rule applies to units that are less t han 2,000,000 Btu per hour and greater than or equal to 75,000 Btu per hour. Units that a re in manufactured homes and humidifiers are currently exempt.

The rule requires that no person sell, install, or offer for sale within the District any natural gas-fired water heater after January 1, 200 7 that emits more than 0.093 lbs of

NO

x /MMBtu if less than or equal to 0.4 MMBtu/hr, or 0. 036 lbs of NO

x /MMBtu if great

than 0.4 MMBtu/hr and less than 2.0 MMBtu/hr. The rule also requires subject water

heaters to be certified.

B. Summary of Proposed Amendments to Rule 4308

Section 2.0 Applicability: This section only has some simple language change s for

clarification.

Section 3.0 Definitions: The definitions of “California PUC Quality Natura l Gas”, “Certified Retrofit Kit”, “Instantaneous Water Heat ers”, “Rated Heat Input”, and

“Recreational vehicle” would be added. The definiti on of “humidifier” would also be

clarified to reflect the exclusion of humidifiers f rom this rule.

Section 4.0 – Exemptions: The exemption for humidifiers would be removed. Humidifiers were not meant as an exemption, but as a unit that is excluded from the definition of “Process Heater”. Therefore, humidif iers are not subject to the requirements of this rule.

District staff is proposing the addition of an exem ption for recreational vehicles. Through stakeholder input and research it has become appare nt that there are very few units in

recreational vehicles that fall under this size cat egory and also run on PUC gas. MostSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 units that are in recreational vehicles are close t o a 12 gallon size unit, which is no where close to the 80 gallon size that a typical 75 ,000 Btu unit is. These units are

located in a mobile source and therefore make them very difficult to track to confirm compliance. Units in a recreational vehicle are typ ically not used on a frequent basis, so contribute very little to the NOx emissions of this source category. Air Districts such as South Coast and Bay Area include this exemption in their rules. Because of a lack of impact and the desire for consistency, District sta ff is proposing to include this exemption.

Section 5.0 – Requirements: The rule requirement would remain as point of sal e or an attrition rule instead of changing to a forced r eplacement rule. District staff thoroughly looked at different options for a forced replacement. However, upon further input from stakeholders and research, it became app arent that the costs for a forced replacement schedule would be considerable to busin esses. The socioeconomic analysis showed significant impacts on dry cleaners and limited service restaurants if forced replacement were to be required.

With forced replacement, there is also a problem wi th enforceability of the rule. Facilities with Title V permits and other permits with the Dis trict were concerned that their locations would be held to the forced replacement r equirement, but those locations without any permits would be allowed to continue us ing older units. Also, with the number of units in this size category, it would be very difficult for District staff to be able to follow up with all of the units.

An attrition rule is not only more enforceable and more economically feasible, but it allows the District to still get the amount of NOx reductions as the forced replacement. This attrition rule assumes a useful life of 20 yea rs per unit, instead of the forced 15 year replacement. The NOx reductions will be sprea d out over a longer period of time, but the same amount of reductions will eventually b e achieved. For further detail on emissions reductions, refer to Appendix B.

Emission levels would be changed to 20 ppm or 0.024 lb of NOx per MMBtu/hr for both

0.075 MMBtu/hr – 0.4 MMBtu/hr and 0.4 MMBtu/hr – 2. 0 MMBtu/hr categories, except for instantaneous water heaters, pool heaters and u nits fired on non-PUC quality gas and liquid fuels. These other categories have diffe rent standards to reflect what is possible with the available technology or what has previously not been specified in the

rule.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 Special consideration was given to the possibility of different NOx limits for high efficiency units. The U.S. Department of Energy Re gulations and the California Energy Commission has an Appliance energy efficiency requi rement that applies to units of this size. They require units to be at least 80% energy efficient. Representatives of Pulse Combustion technology asked District staff to consi der allowing their technology to continue to be used, even though the units have an emissions concentration of close to 28 ppmv of NOx, because of the high fuel and electr ical efficiency of the unit. However,

District staff did not receive sufficient informati on to show that the lower use of fuel was significant enough to counteract the higher ppmv em issions concentration. Also it became apparent that there are other units that are more fuel and energy efficient and still meet the proposed 20 ppmv NOx limit. Because the goal of this rule is to reduce specifically NOx emissions, District staff decided not to grant special consideration to these particular units at this time. This is consis tent with the SCAQMD’s rule.

Section 6.0 – Administrative Requirements: Certification and compliance options will be made specific to manufacturers. Manufacturers wi ll be required to submit information according to previous rule requirements in Sections 6.2 and 6.3. Language has been

added to include the certification of retrofit kits

. Section 7.0 – Compliance Schedule: The compliance deadline will be changed to January 1, 2011 by which units must comply with the Tier 2 specifications in order to reflect the goals for the new amendments and to coi ncide with PM 2.5 Plan emissions

reductions commitments. The emissions reductions th at are claimed in the PM2.5 Plan will be achieved by the replacement of units starti ng with the January 1, 2011 compliance date. Table 1

Emissions Limits Type and Size of Unit

(in MMBtu/hr) NOx Limit

(at 3% stack gas oxygen by volume on a dry basis)

All Fuels PUC Gas Non PUC Gas and Liquid Fuel

Tier 1

lb/MMBtu of heat input (ppmv) Tier 2

lb/MMBtu of heat input (ppmv) Tier 2

lb/MMBtu of heat input (ppmv) Units greater than or equal to 0.075 but less than or equal to 0.4 0.093 (77) 0.024 (20) 0.093 (77)

Units greater than 0.4 but less than

2.0 0.036 (30) 0.024 (20) 0.036 (30)

Instantaneous water heaters and pool heaters greater than or equal to 0.075 but less than or equal to

0.4 0.093 (77) 0.068 (55) 0.093 (77)

Instantaneous water heaters and pool heaters greater than 0.4 but

less than 2.0 0.036 (30) 0.024 (20) 0.036 (30)SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 IV. CURRENT EMISSIONS AND EMISSIONS REDUCTION

The South Coast Air Quality Management District (SC AQMD) calculated capacity factors and emission rates for units subject to SCA QMD Rule 1146.2 (Large Water Heaters and Small Boilers) by gathering data from b oiler manufacturers and conducting a statistical survey. District Rule 4308 will regu late the same class and size of units like those subject to Rule 1146.2. Therefore, District staff will use capacity factors, emission rates and population estimates for the emissions an alysis that are similar to those used in the SCAQMD final staff report on Rule 1146.2.

The current and new levels for lbs/MMBtu are calcul ated using the formula developed in the District’s Guideline for Expedited Application Review (GEAR) data for boilers. The following is an example:

(F factor) (Molar weight) (Molar specific vol ume ) (temp difference in kelvin)

77 ppm x 20.9 x 8710 x 46 x 1 x 459.67 + 60 = 0.093 lb/MMBtu

1 x 10 6 20.9- 3 %O 2 379.5 459.67 + 68

In the PM2.5 Plan, the District estimates that 3.59 tons per day (tpd) of NOx and 3.3 tpd

of SOx are emitted in the SJVAB from this source ca tegory. The estimated annual average emissions reductions from this rule are est imated in the PM2.5 Plan at 0.57 tpd. Staff review of the SCAQMD emissions analysis for Rule 1146.2 indicated a need for District staff to improve the estimated number of units in the SJVAB and emissions associated with this source category. District sta ff conducted a survey attempting to

obtain information to form a more accurate emission s inventory. However, only about 50% of surveys were returned, and very few of them contained any shared information. Therefore, District staff will continue to use the estimates that were previously made.

The emissions and emissions reductions analysis fro m sources affected by this proposed rule amendments can be found in Appendix B . Emissions reductions for SOx

were not calculated for this amendment. At this tim e, it is believed that the emissions of SOx from natural gas are as low as is feasible. The refore, no emissions reductions for SOx from the proposed amendments will be claimed.

V. COST EFFECTIVENESS ANALYSIS

CH&SC Section 40920.6(a), requires the District to analyze the cost effectiveness of new rules or rule amendments that implement Best Av ailable Retrofit Control Technology (BARCT) or all feasible measure. The es timated cost effectiveness is $1,500 - $2,000 per ton of NOx for an individual un it. District staff has prepared a cost effectiveness analysis of the rule to analyze the e conomic feasibility of the proposed rule amendments. This analysis can be found in Appendix C.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 VI. SOCIOECONOMIC ANALYSIS

CH&SC Section 40728.5(a) requires the District to p erform an assessment of the socioeconomic impacts of the adoption, amendment, o r repeal of a rule or regulation that will significantly affect air quality or emiss ion limitations. The socioeconomic analysis will be used to further refine the rule am endments. The socioeconomic report is published as part of the Final Draft Staff Repor t, and is located in Appendix D of the Final Draft Staff Report.

The Socioeconomic Analysis in Appendix D is an anal ysis that was conducted on August 21, 2009 on a previous version of the rule. The analysis assumes forced replacement every 15 years, thus showing some level s of significance. After that initial analysis, more revisions were made to the cost of u nits, showing even more impact to various different sectors of business. With the poi nt of sale rule and the current proposed amendments, the socioeconomic impacts are no longer significant.

VII. ENVIRONMENTAL IMPACT ANALYSIS

Pursuant to the California Environmental Quality Ac t (CEQA), District staff has investigated any potential environmental impacts of the proposed rule amendments to Rule 4308 and will recommend appropriate action to the District G overning Board. Based on the lack of evidence to the contrary, District staff has conclu ded that the proposed amendments to the rules will not have a significant adverse effec t on the environment. District staff has prepared a Draft Negative Declaration for the proje ct. Upon approval of the proposed rule by the District’s Governing Board, District st aff will file a Notice of Determination with each County Clerk within the boundaries of the District, CEQA Guidelines §15075(d).

With the adoption of the District’s policy on Clima te Change and Greenhouse Gases (GHG), each new rule or rule amendment will now eva luate its impact on GHG’s. For boilers of this size category, an 80% thermal and e nergy efficiency standard has been put in place by the California Energy Commission an d the U.S. Department of Energy Regulations for appliances, including boilers, stea m generator, process heaters, and

water heaters.

There is the slight possibility that fuel or energy efficiency would decrease as a result of this rule project because of the impact on fuel eff iciency that low NOx and ultra low NOx burner technology can have. With the current NOx li mit, boilers can reach 95% energy efficiency, but with the ultra low NOx burner, that efficiency becomes more difficult to achieve. High efficiency units are available that achieve the 20 ppmv NOx limit, but those units tend to be more expensive.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 A. POTENTIAL EMISSIONS OF GHG

District staff has calculated the estimated effect this rule amendment project will have on greenhouse gas emissions, taking into considerat ion the slight impact on efficiency

of the units.

Taking the population of boilers here in the SJVAB and the number of units on average that are replaced each year over a 20 year period, staff has calculated the number of units that may have already been replaced with the higher efficiency units because of the adoption of this rule in 2005. Section III B o f Appendix B of the Staff Report

contains the calculation of the number of units on average that are replaced each year.

882 units each year x 4 years of the 2005 rule = 3, 530 units that comply with 30 ppmv

Based on data that staff has received from stakehol ders and retailers, these 3,530 units

tend to be 3-5% more efficient than units that meet the 20ppmv. If a new unit that reaches the 20 ppmv NOx limit is less efficient, th at lost efficiency would be minimal, such as going from 87% energy efficiency to 84% ene rgy efficiency. Therefore, exchanging these units in the future may cause a sl ight increase in GHG emissions.

However, approximately 75% of the boiler population is made up of uncontrolled units with lower efficiencies that have yet to be replace d and will be impacted by the rule amendment project.

17,600 units total – 3,530 units already replaced = 14,070 uncontrolled units

These uncontrolled units typically run at a lower e fficiency and can be estimated to meet the 80% appliance efficiency standard. These units , once replaced, will be more efficient by 7-10%, therefore causing a decrease in GHG emissions.

District staff believes that the overall net effect of this rule amendment project will be a decrease in GHG emissions. The uncontrolled units, which make up 75% of the boiler population, are going from a lower efficiency to a higher efficiency rate; whereas, the units complying with the 30 ppmv, which make up 25% of the population, may decrease in efficiency. The increase in efficiency by 7-10% for 75% of the population is a much greater impact than the possible 3-5% efficiency de crease for 25% of the population. Therefore, the greenhouse gas impacts for this rule amendment project will be less than significant.

VIII. RULE CONSISTENCY ANALYSIS

Pursuant to CH&SC Section 40272.2, District staff has prepared a rule consistency analysis of Rule 4308 as part of the rule developme nt process that compares theSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

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For Amendments to Rule 4308 elements of proposed rule amendments with the corre sponding elements of other District rules, federal regulations and guidelines that apply to the same source category or type of equipment.

IX. REASONABLY AVAILABLE CONTROL TECHNIQUES (RACT) ANALYSIS

RACT Discussion

The Clean Air Act (CAA) Section 182(b)(2) states th at ozone attainment plans shall assure that RACT for volatile organic compounds (VO C) is applied at certain sources. Section 182(f) extends federal RACT requirements to NOx rules and major NOx sources. District Rule 4308 is a NOx rule, therefo re underwent a RACT analysis during this rule amending project. A RACT analysis requir es an examination of a rule against Federal rules, regulations, and technology guidelin es as well as comparing it against

rules from other Districts in California. District Rule 4308 was compared to federal and state regulations and guidance. The following is a discussion of that analysis.

District staff compared emission limits, optional c ontrol requirements, and work practice standards in District Rule 4308 to comparable requi rements in rules from the other Air

Districts in California nonattainment areas. Furth er discussion and comparisons of

District Rule 4308 with rules in other Air District s in California is presented in Section IIB “Source Category” of the Final Draft Staff Report . District staff has concluded based on the aforementioned analyses, that District Rule 4308 satisfies RACT for small boilers and large water heaters.

A. Comparison with Federal Rules and Regulations

1. Federal Control Techniques Guideline (CTG)

There is no EPA CTG for boilers, steam generators, water heaters or process heaters

for sizes 0.075 MMBtu/hr to 2.0 MMBtu/hr.

2. Alternative Control Technology (ACT)

Three Alternative Control Techologies could apply t o this rule. EPA-453/R-93-034

discusses the NOx Emissions from Process Heaters. E PA-453/R-94-022 covers the NOx Emissions from ICI Boilers, and EPA-453/R-94-02 3 discusses the NOx Emissions from Utility Boilers.

3. Federal New Source Performance Standards (NSPS)

There is no NESHAP or MACT for boilers, steam gener ators, water heaters or process

heaters for sizes 0.075 MMBtu/hr to 2.0 MMBtu/hr.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4308 Decemb er 17, 2009

14 Final Staff Report with Appendices

For Amendments to Rule 4308 4. National Emission Standards for Hazardous Air Po llutants (NESHAPs) and Maximum Achievable Performance Standards (MACTs)

There is no NESHAP or MACT for boilers, steam gener ators, water heaters or process

heaters for sizes 0.075 MMBtu/hr to 2.0 MMBtu/hr.

5. EPA Policy on Recordkeeping

The recordkeeping requirement in Rule 4308 is consi stent with EPA’s policy to keep and maintain records for at least five years.

B. Comparison with Other California Non-Attainment Areas

District staff compared emission limits, optional c ontrol requirements, and work practice standards in District Rule 4311 to comparable requi rements in rules from the following

California nonattainment areas:

• South Coast AQMD Rule 1146.2

• Bay Area AQMD Regulation 9, Rule 6

SCAQMD has a forced replacement provision as part o f their rule which requires that units older than 15 years old be replaced. This is different from both BAAQMD’s rule and also the SJV rule which only require new or rep lacement units to meet the new NOx

standards. District staff believes that the forced replacement measure is beyond the RACT requirement. As explained below, because the average unit life for this size category is 20 years, the “point of sale” approach achieves the needed emissions reductions in a timely and more cost effective mann er.

District staff’s initial proposal for amendments to the rule included a forced replacement schedule. The first socioeconomic analysis and cost effectiveness analysis for a forced replacement showed a notable economic impact on dry cleaning facilities and limited service restaurants which would have had to replace multiple units per location. After several workshops, District staff received more cos t information provided by sellers, stakeholders, and contractors that was higher than the conservative numbers used

Replacement Emission Standards

(for each size category) Year Rule become Effective

20 ppm for 0.4-2.0 2011 SJVAPCD Attrition 20 ppm for 0.075-0.4 2011

20 ppm for 0.4-2.0 2010 SCAQMD 15 yrs 20 ppm for 0.075-0.4 2012

30 ppm for 0.4-2.0 2008 BAAQMD Attrition 20 ppm for 0.075-2.0 2013SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4308 Decemb er 17, 2009

15 Final Staff Report with Appendices

For Amendments to Rule 4308 before in the cost effectiveness estimate. The new cost information was used to update the cost-effectiveness and socioeconomic impact of the rule on businesses and industry. Using this new cost information, the revi sed socioeconomic numbers showed the dry-cleaners, limited service restaurants, and schools would be even more impacted

than the first estimate indicated.

The cost of reductions for a forced replacement rul e is much higher than for an attrition rule. For a forced replacement rule, the cost effec tiveness analysis must include the

entire cost of a unit and the installation costs. H owever, with an attrition rule, the compliance costs only include the dollar difference between a standard unit and a lowNOx, compliant unit. An example would be the cost e ffectiveness of a 0.4 MMBtu/hr unit for the forced replacement approach and the attriti on approach.

For forced replacement:

$11,204 (cost of unit) + $11,204 (installation cost s are 100% the capital cost) = $22,408

$22, 408 x 0.131 (annualize capital cost factor for 15 years) = $2,936 per year

$2, 936 per year / 0.0436 NOx tpy = $67, 327 per to n of NOx

For attrition:

$750 (cost difference between compliant and noncomp liant unit)

$750 x 0.117 (annualize capital cost factor for 20 years) = $88 per year

$88 per year/0.0436 NOx tpy = $2,000 per ton of NOx

Because of the poor cost effectiveness and the sign ificant impacts to some businesses, District staff recommends an attrition rule, simila r to Bay Area’s rule. From research and discussions with stakeholders, these proposed limit s are achievable and yet the technology is still reasonably available and achiev able. Because the District is proposing the same NOx requirements as the other Ca lifornia nonattainment areas and proposing the changes to occur at a similar time, D istrict staff believes that federal RACT requirements have been satisfied.

C. Conclusion

District staff concludes that District Rule 4308 sa tisfies RACT for small boilers and large water heaters in terms of emission limits and equip ment standards.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DI STRICT

Final Staff Report: Rule 4308 Decemb er 17, 2009

16 Final Staff Report with Appendices

For Amendments to Rule 4308 X. REFERENCES

1. Emissions Inventory Improvements for Selected S ource Categories prepared by

Pacific Environmental Services Inc. on External Com bustions Boilers, Steam Generators and Process Heaters, published July 6, 2 001.

2. SCAQMD Final Staff Report for Rule 1146.2 adop ted April 2006.

3. SCAQMD Rule 1146.2 (Emissions of Oxides of Nit rogen from Large Water Heaters and Small Boilers), Adopted January 9, 1998 and Ame nded January 7, 2005.

4. San Joaquin Valley Unified Air Pollution Control District 2007 Ozone Plan, April 30,

2007.

5. San Joaquin Valley Unified Air Pollution Control District 2008 PM2.5 Plan, April 30,

2008

6. Federal Clean Air Act, Amended 1990

7. San Joaquin Valley Unified Air Pollution Control District, Rules and Regulations

8. Bay Area AQMD Regulation 9 Rule 6

9. Bay Area AQMD Regulation 9 Rule 6 Staff Report

10. Los Alamos National Laboratory Environmental Do cuments http://www.lanl.gov/environment/air/docs/progs/OpPe rmit_LANLSect3-4.pdf

11. Lochinvar’s Unit List prices, effective August 18, 2008, Efficiency Information

12. Fulton unit information and source testing, 200 9, Test Report of Fulton Boilers with

Low NOx Burner