APPENDIX D 

Socioeconomic Analysis for Amendments to 

Rule 4308 (Boilers, Steam Generators, and Process Heaters - 

0.075 MMBtu/hr to less than 2.0 MMBtu/hr) 

December 17, 2009 
SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis for Rule 4308 December 17, 2009 

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SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis for Rule 4308 December 17, 2009 

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The Socioeconomic Analysis in Appendix D was conducted on August 21, 2009 on a previous 

version of the rule. The analysis assumes a forced replacement of the majority of units every 15 

years, thus showing some levels of significance. After that initial analysis, revisions were made to the 

cost estimates, showing even greater impact to various different sectors of business such as dry 

cleaners and limited service restaurants. There was also the potential for significant financial impact 

to businesses or locations with more than five units. 

The socioeconomic impact was one of the reasons District staff decided that the amendments to the 

rule should not include a forced replacement schedule. The cost of compliance with this rule went 

from an average of $4,000 - $60,000 per unit to $100 - $3,000 per unit. With the point of sale rule 

and the proposed amendments for the December 17, 2009 public hearing, the cost of the rule has 

been significantly reduced and the socioeconomic impacts for the affected groups are no longer 

significant.
SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis for Rule 4308 December 17, 2009 

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SOCIO-ECONOMIC IMPACT ANALYSIS 

PROPOSED AMENDMENTS TO RULE 4308 

(BOILERS, PROCESS HEATERS, STEAM GENERATORS: 

0.075 MMBTU/HR TO LESS THAN 2.0 MMBTU/HR)

DRAFT 

AUGUST 21, 2009 

Prepared for 

San Joaquin Valley Unified Air Pollution Control District 

Prepared by 

Applied Development Economics 

100 Pringle Avenue, Suite 560  Walnut Creek, California 94596  (925) 934-8712 

2151 River Plaza Drive, Suite 150  Sacramento, CA 95833  (916) 923-1562 

www.adeusa.com
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CONTENTS 

1. Executive Summary...........................................................................................................................7

2. Introduction........................................................................................................................................9

3. Description of Draft Amendments to Rule 4308 .........................................................................11

4. Methodology.......................................................................................................................................12

5. Impacted Industries Subject To Proposed Amendments to Rule 4308 ....................................13

6. Socio-economic Impacts...................................................................................................................22
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1. EXECUTIVE SUMMARY 

The District seeks to amend Rule 4308 (Boilers, Steam Generators and Process Heaters 0.075 to 

less than 2.0 MMBtu/hr) to satisfy the goals of the District’s 2007 Ozone Plan and 2008 PM2.5 

Plan. Currently, Rule 4308 is a point of sale type rule and the source category affected would 

include water heater manufacturers, plumbing wholesalers, business and oil supply stores, plumbers 

and contractors, and oil businesses. The proposed changes would require any commercial owners 

or operators to replace their unit(s) that are 15 years and older or prove that the unit performs at 

the designated standard. For residential units the requirement will remain a point of sale standard, 

with no requirement to replace units older than 15 years. District staff seeks to amend Rule 4308 to 

implement an emission control measure (S-COM-3) in the District’s 2007 Ozone Plan and 2008 

PM 2.5 Plan. The control measure indicates that NOx emission reductions could be achieved by 

lowering the NOx emission limit. 

The analysis shows that a wide range of private- and public-sector industries are potentially affected

by the proposed amendments. Many of these industries grew at rates faster than the regional 

economy as a whole over the last five years. The analysis concludes that industries are not 

significantly impacted by the proposed amendments. Small businesses are not disproportionate 

impacted as well. 
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2. INTRODUCTION 

This report describes the socioeconomic impacts of Draft Amendments to Rule 4308 (Boilers, 

Steam Generators and Process Heaters 0.075 MMBtu/hr to less than 2.0 MMBtu/hr) dated 

September 1, 2009, which implements an emission control measure in the District’s 2007 Ozone 

Plan and 2008 PM2.5 Plan. Following this introduction, the report summarizes the proposed 

amendments and describes the methodology for the socioeconomic analysis. In Section 5, the 

report describes the economic characteristics of sources affected by the proposed amendments. 

The sixth section analyzes the socioeconomic impacts of compliance costs on the affected sources 

and the regional economy. 

The report is prepared pursuant to the provisions of AB2051 (Section 40728.5 of the California 

Health and Safety Code), which requires an assessment of socioeconomic impacts of proposed air 

quality rules. The findings in this report can assist District staff in understanding the 

socioeconomic impacts of the proposed amendments, and can assist staff in preparing a refined 

version of the rule. Figure 1 is a map of the eight-county region that comprises the San Joaquin 

Valley Air Basin. As indicated in the map, Kern County is not completely in the District. 

FIGURE 1 

MAP OF SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT
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3. DESCRIPTION OF DRAFT AMENDMENTS TO RULE 

4308 

This section of the report begins by reviewing the context within which the District seeks to amend 

Rule 4308. Then, this section discusses Rules 4308 as currently written, and summarizes proposed 

changes to this rule. 

The District seeks to amend Rule 4308 (Boilers, Steam Generators and Process Heaters 0.075 

MMBtu/hr to less than 2.0 MMBtu/hr) to satisfy the goals of the District’s 2007 Ozone Plan and 

2008 PM2.5 Plan. The draft amendments to Rule 4308 will seek to obtain as much NOx, SOx, and 

PM emission reductions from the source category as expeditiously practicable, technologically 

feasible, and economically reasonable, as determined by the District’s Governing Board. 

CURRENT RULE 4308 (BOILERS, STEAM GENERATORS AND PROCESS 

HEATERS 0.075 TO LESS THAN 2.0 MMBTU PER HR) AND PROPOSED 

CHANGES 

The District’s Governing Board adopted Rule 4308 (Boilers, Steam Generators, and Process 

Heaters – 0.075 MMBtu/hr to less than 2.0 MMBtu/hr) on October, 20, 2005. Rule 4308 currently 

is a point of sale type rule and the source category affected would include water heater 

manufacturers, plumbing wholesalers, business and oil supply stores, plumbers and contractors, 

and oil businesses. The proposed changes would require any commercial owners or operators to 

replace their unit(s) that are 15 years and older or prove that the unit performs at the designated 

standard. For residential units the requirement will remain a point of sale standard, with no 

requirement to replace units older than 15 years.

District staff seeks to amend Rule 4308 to implement an emission control measure (S-COM-3) in 

the District’s 2008 PM 2.5 Plan. The control measure indicates that NOx emission reductions 

could be achieved by lowering the NOx emission limit. 

As guidelines for developing the proposed changes to Rule 4308, District staff studied rules from 

other air districts within and outside of California. Lower NOx limits are already in place in the 

following rules; South Coast Air Quality Management District (SCAQMD) Rule 1146.2 (Emissions 

of Oxides of Nitrogen 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 

Oxides Emissions From Natural Gas-Fired Boilers And Water Heaters) (Amended November 7, 

2007). 
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4. METHODOLOGY 

The socioeconomic analysis involves the use of information provided directly by affected sources, 

as well as secondary data used to describe the industries affected by the proposed amendments to 

the Rule 4308. The approach is briefly described below. 

Applied Development Economics (ADE) began the analysis by preparing a statistical description 

of the industry groups of which the affected sources are a part, analyzing data on the number of 

jobs, sales levels, the typical profit ratios and other economic indicators for each industry. 

This report relies heavily on the most current data available from a variety of sources, such as the 

2002 Economic Census and the State of California’s Employment Development Department 

(EDD) Labor Market Information Division. For purposes of estimating profits, ADE reviewed 

industry-specific financial ratios issued by the US Internal Revenue Services. 

With the above information, ADE was able to estimate net after tax profit ratios for sources 

affected by the proposed amendments. ADE calculated ratios of profit per dollar of revenue for 

affected industries. The result of the socioeconomic analysis shows what proportion of profits the 

compliance costs represent. Based on assumed thresholds of significance, ADE discusses in the 

report whether the affected sources are likely to reduce jobs as a means of recouping the cost of 

rule compliance or as a result of reducing business operations. To the extent that such job losses 

appear likely, the indirect multiplier effects of the jobs losses are estimated using a regional 

IMPLAN input-output model. 

When analyzing the socioeconomic impacts of proposed new rules and amendments, ADE works 

closely within the parameters of accepted methodologies discussed in a 1995 California Air 

Resources Board report called “Development of a Methodology to Assess the Economic Impact 

Required by SB513/AB969” (by Peter Berck, PhD, UC Berkeley Department of Agricultural and 

Resources Economics, Contract No. 93-314, August, 1995). The author of this report reviewed a 

methodology to assess the impact that California Environmental Protection Agency proposed 

regulations would have on the ability of California businesses to compete. The California Air 

Resources Board (ARB) has incorporated the methodologies described in this report in its own 

assessment of socioeconomic impacts of rules generated by ARB. One methodology relates to 

determining a level above or below which a rule and its associated costs is deemed to have 

significant impacts. When analyzing the degree to which its rules are significant or insignificant, 

ARB employs a threshold of significance that ADE follows. Berck reviewed the threshold in his 

analysis and wrote, “The Air Resources Board’s (ARB) use of a 10 percent change in [Return on 

Equity] ROE (i.e. a change in ROE from 10 percent to a ROE of 9 percent) as a threshold for a 

finding of no significant, adverse impact on either competitiveness or jobs seems reasonable or 

even conservative.” 
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5. IMPACTED INDUSTRIES SUBJECT TO PROPOSED 

AMENDMENTS TO RULE 4308 

This section of the socioeconomic analysis describes demographic and economic trends in the San 

Joaquin Valley region. The first part of this section compares the San Joaquin Valley region against 

California as a whole, and provides a context for understanding demographic and economic 

changes that occurred within the San Joaquin Valley region between 1998 and 2008. Starting with 

sub-section 5.2, the second part of this section narrows the focus of the socioeconomic analysis to 

industries affected by the proposed changes to Rule 4308. The second part of this section describes 

the economic characteristics of potentially impacted industries that might be subject to these rules. 

5.1 REGIONAL DEMOGRAPHIC AND ECONOMIC TRENDS 

REGIONAL DEMOGRAPHIC TRENDS

The San Joaquin Valley region experienced tremendous population growth during the 1990s. Many 

came to this area because of affordable housing. As a result, population increased significantly. The 

eight-county region’s population increased by 24 percent (or approximately 2.2 percent annually), 

from 3.2 million in 1998 to 3.9 million in 2007. In the last five years, population growth rate 

slightly declined, as regional population grew by 2.2 percent annually between 2003 and 2008. 

While the State of California’s population increased by 14 percent (or approximately 1.4 percent 

annually) between 1998 and 2008, all the counties in the region experienced faster rates of growth 

than California over the period, as Table 1 shows. While, by many standards, Madera County 

continues to be a small county– at 150,887 residents according to the Department of Finance–it 

still experienced an annual growth rate of 2.8 percent between 1998 and 2008. Between 2003 and 

2008, this county continued to grow annually but at a slightly lesser rate of 2.7 percent. In the same

five-year period, Kern, Merced, and San Joaquin Counties experienced rapid growth, growing 

annually by 2.9 percent, 2.4 percent, and 2.2 percent respectively, as Table 1 below shows. As 

demonstrated in the following section on regional economic trends, the demographic changes that 

occurred in the San Joaquin Valley region during the 1990s and into the new century significantly 

influenced the economy of this eight-county region.
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TABLE 1 

POPULATION TRENDS 

 1998 2003 2008 98-03 03-08 98-08 

State 33,225,655 35,652,700 38,049,462 1.4% 1.3% 1.4% 

Region 3,192,439 3,540,392 3,956,003 2.1% 2.2% 2.2%

 Fresno 781,936 846,485 931,098 1.6% 1.9% 1.8% 

 Kern 637,227 708,753 817,517 2.2% 2.9% 2.5% 

 Kings 120,957 137,411 154,434 2.6% 2.4% 2.5% 

 Madera 114,137 131,821 150,887 2.9% 2.7% 2.8% 

 Merced 203,181 227,132 255,250 2.3% 2.4% 2.3% 

 San Joaquin 546,852 616,477 685,660 2.4% 2.2% 2.3% 

 Stanislaus 428,272 483,705 525,903 2.5% 1.7% 2.1%

 Tulare 359,877 388,608 435,254 1.5% 2.3% 1.9% 

Source: ADE, Inc., based on California Department of Finance

REGIONAL ECONOMIC TRENDS

Economic development practitioners and planners have traditionally divided economies into two 

broad industrial categories—the economic base and local support industries. Economic base 

industries are the drivers of local and regional economies in that these industries draw income into 

a local economy by selling products outside of the local economy, much like the export industries 

of a national economy. Accrued earnings then circulate throughout the local area in the form of 

wages and salaries; investments; purchases of fixed assets, goods, and services; and generation of 

more jobs and wealth. 

The economic base is typically comprised of industries within the manufacturing, minerals-resource 

extraction, and agricultural sectors. There are also the “local support industries” such as retail or 

service sectors, the progress of which is a function of the economic base and demographic 

changes, and more so the latter than the former. As population increases in a given area, demand 

for services–such as realtors, teachers, and healthcare–increases, as does demand for basic retail 

items like groceries, gas for commuting, or clothing at the local apparel shops. 

Agriculture is the economic base of the San Joaquin Valley region by virtue of the amount of goods 

this sector produces and exports throughout the nation and the globe. Slightly less than 14 percent 

of all workers in the region are employed by industries within agriculture, as Table 2 shows. In 

1996, approximately 13.1 percent of all workers worked in agriculture. By 2003, this ratio stood at 

14 percent. In fact, over the five-year period between 2003 and 2008, employment in agriculture 

increased at a modest pace of one percent per year.

Between 2003 and 2008, local support industries gained in prominence within the San Joaquin 

Valley region. Service-rendering industries employed the most workers as a proportion of total 

employment in the region. Service-rendering industries comprise 71 percent of all jobs, including 

public sector positions. In other words, 932,713 jobs out of a total of 1,317,365 jobs are in servicerendering industries. Excluding the public sector, service-rendering jobs account for 52 percent of 

all jobs in 2006. In 2003, service-rendering industries (excluding the public sector) represented 51 

percent of all jobs, indicating that the transition toward a services economy was in place as early as

the mid to late 1990s with the significant increase in the number of people during that time. 
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Employment increases in service-rendering industries are consistent with regional population 

growth. In the region, local support industries of local and private education, and health, and 

financial activities increased annually by 3.9 percent, 3.0 percent, and 2.7 percent respectively 

between 2003 and 2008. 

Construction and financial services are two other local support industries that grew in accordance 

with the region’s population surge; however, with the downturn in the national economy, these 

industries’ rates of growth have lowered dramatically. Employment in construction grew by a 6.7 

percent per year in the five-year period stretching from 1998 to 2003. Between 2003 and 2008, 

construction continued to grow but by a slower rate of 0.9 percent per year. Likewise for financial 

services, which grew annually by 3.9 percent between 1998 and 2003, and has since grown by a 

slight 0.9 percent per year. 

Close examination of Table 2 shows that the region experienced modest growth in manufacturing, 

as employment in this sector grew annually by 0.9 percent between 2003 and 2008. This modest 

increase reversed substantial declines experienced between 1998 and 2003, when manufacturing 

employment dropped annually by 0.6 percent. What was a regional bright spot between 1998 and 

2003, transportation and warehousing experienced negative 1.1 percent declines between 2003 and 

2008, as compared to the 2.7 percent annual growth in the previous five-year period.
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. 

TABLE 2 

ECONOMIC TRENDS: SAN JOAQUIN VALLEY, 1998-2008 

Employment 

Distribution 

Employment: 

Annual Percent 

Change 

 ----------------1998--------------- ----------------2003---------------- ----------------2008--------------- 2008 98-03 03-08 

 NAICS Estab. Employment 

Average 

Pay Estab. Employment 

Average 

Pay Estab. Employment 

Average 

Pay Region California 

ALL 80,398 1,060,454 $33,566 92,231 1,209,849 $40,577 100,414 1,317,365 $39,543 100.0% 100.0% 2.7% 1.7%Ag, Natural Resources 11 7,580 139,953 $18,285 8,646 169,556 $23,354 7,371 178,522 $21,714 13.6% 2.5% 3.9% 1.0% 

Utilities 21 251 9,533 $66,831 213 8,340 $81,309 185 10,512 $82,627 0.8% 0.0% -2.6% 4.7% Mining 22 165 4,231 $72,458 179 5,071 $86,065 169 5,618 $81,296 0.4% 0.4% 3.7% 2.1% Construction 23 6,124 49,851 $38,969 6,074 69,065 $46,870 6,705 72,312 $44,716 5.5% 5.7% 6.7% 0.9% Manufacturing 31-33 2,998 113,344 $40,989 2,779 110,002 $48,735 2,662 115,153 $43,352 8.7% 9.3% -0.6% 0.9% Wholesale 42 2,749 33,365 $47,726 2,722 37,124 $53,053 3,027 45,299 $46,510 3.4% 4.6% 2.2% 4.1% Retail 44-45 9,586 121,132 $26,446 8,941 132,956 $31,349 8,882 143,910 $25,892 10.9% 10.8% 1.9% 1.6% 

Transport Warehousing 48-49 2,306 33,821 $38,946 2,237 38,554 $44,962 1,957 36,514 $40,166 2.8% 2.7% 2.7% -1.1% 

Information 51 653 14,885 $43,401 692 14,257 $53,695 625 15,328 $47,417 1.2% 3.0% -0.9% 1.5% Finance and Insurance 52 2,637 27,792 $46,709 3,046 30,690 $59,530 3,373 32,027 $50,112 2.4% 4.0% 2.0% 0.9% Real Estate 53 2,575 13,180 $26,755 2,607 15,932 $34,144 2,784 15,897 $32,633 1.2% 1.8% 3.9% 0.0% Prof Technical Services 54 4,064 25,130 $44,216 4,501 31,812 $52,467 4,839 36,411 $46,773 2.8% 6.8% 4.8% 2.7% Management of Companies 55 321 17,997 $52,338 316 13,988 $60,045 288 10,551 $55,323 0.8% 1.3% -4.9% -5.5% 

Admn and Waste Services 56 2,910 44,283 $22,362 2,768 48,182 $28,986 2,947 58,761 $27,165 4.5% 6.4% 1.7% 4.0% 

Private Educational Services 61 459 7,107 $25,456 480 9,298 $29,532 497 10,781 $27,407 0.8% 1.7% 5.5% 3.0% Health Services 62 6,082 90,304 $38,243 6,526 110,647 $47,867 6,983 126,598 $44,058 9.6% 8.8% 4.1% 2.7% 

Arts, Entertainment, Rec 71 617 10,386 $16,985 621 10,244 $20,192 641 11,172 $17,305 0.8% 1.6% -0.3% 1.7% 

Food and Accommodations 72 5,050 70,335 $12,860 4,942 78,805 $15,831 5,312 90,404 $14,020 6.9% 8.3% 2.3% 2.8% Other Services 81 20,157 41,069 $21,165 30,390 47,370 $25,731 35,629 52,505 $21,606 4.0% 4.6% 2.9% 2.1% Unclassified 99 85 199 $38,033 1,769 2,534 $26,836 0.2% 0.3% Local Govt. 409 51,325 $45,674 437 60,768 $56,307 477 68,469 $51,051 5.2% 5.2% 3.4% 2.4% Local Govt., Education 881 90,200 $39,664 1,487 109,087 $48,304 1,792 118,716 $78,718 9.0% 5.9% 3.9% 1.7% State, ALL 1,464 23,639 $46,051 1,166 28,463 $56,515 1,078 31,639 $51,222 2.4% 2.9% 3.8% 2.1% Federal, ALL 360 27,592 $52,749 376 29,439 $66,395 424 27,732 $58,945 2.1% 1.6% 1.3% -1.2% Source: ADE, Inc., based on California Employment Development Department, LMID 
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5.2 DESCRIPTION OF AFFECTED INDUSTRIES 

Whereas the previous section described the larger economic context within which the District is 

contemplating proposed amendments to Rule 4308, this section analyzes trends of industries 

directly affected by the proposed amendments. This rule affects a broad array of industries in 

the private and public sectors. As it is, the District estimates that there are 17,600 units with a 

heat input rating between 0.075 MMBtu/hr to less than 2.0 MMBtu/hr located in the District. 

Businesses use their respective units to run small furnaces and heaters, and these units can heat 

process fluids directly or use a heat exchange fluid. 

Table 3 below identifies the industries that will be impacted by proposed amendments to Rule 

4308. It is important to note that not all businesses in industries listed in the table below will be 

impacted by proposed amendments to Rule 4308. Some may already operate units that comply 

with the proposed amendments. Table 3 includes the industries below because, for the most 

part, their respective businesses require units with a heat input rating between 0.075 MMBtu/hr 

and 2.0 MMBtu/hr to operate their respective buildings, which they operate in on a stand-alone 

basis. Thus, any costs stemming from the proposed amendments will be borne by the business 

themselves, and not distributed amongst other tenants and lessees. 

As demonstrated in the table below, 12 specific private sector industries will be subject to the 

proposed amendments, and an even broader array of local, state and federal agencies will be 

impacted as well. Altogether, affected industries employ 400,772 workers. Between 2004 and 

2008, these public and private sector industries grew by 54,406 workers, or by 3.7 percent per 

year. Of the 400,772 workers, 163,600 workers are in the private sector, or 41 percent. At 3.7 

percent per year, industries potentially impacted by the proposed amendments have grown at 

faster rates than overall industries in the region (1.7 percent annual growth), as indicated in Table 

2 above.
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TABLE 3. INDUSTRIES SUBJECT TO PROPOSED AMENDMENTS TO RULE 4308: EMPLOYMENT TRENDS: 2004-2008 

2004 2005 2006 2007 2008 

2004-2008 

Change 

2004-2008 

Percent 

Change 

04-08 Annual 

Percent 

Change 

Private Food production 3111 1,050 1,477 899 1,158 1,911 861 82.0% 16.1%  Petroleum refineries 32111 647 587 579 626 637 -10 -1.5% -0.4%  General Merchandise Stores 4521 20,738 24,644 26,102 25,997 25,636 4,898 23.6% 5.4%  Elementary and Secondary Schools 6111 1,977 1,937 1,946 2,368 2,590 613 31.0% 7.0%  Junior Colleges 6112 478 709 771 807 971 493 103.2% 19.4%  Universities/College 6113 1,950 1,728 1,960 2,171 2,252 302 15.5% 3.7%  Hospitals 6221 18,903 18,845 35,519 46,211 45,614 26,711 141.3% 24.6% 

 Hotels/Motels 7211 1,324 1,880 345 497 495 -829 -62.6% -21.8%  Room/Boarding Houses 7213 29,228 30,293 32,166 33,059 32,481 3,253 11.1% 2.7%  Limited Service Restaurants 7222 41,235 43,163 45,900 46,355 46,774 5,540 13.4% 3.2%  Drycleaning/Laundry Services 8123 2,720 2,563 2,711 2,666 2,644 -76 -2.8% -0.7%  Religious Organizations 8131 1,653 1,642 1,690 1,532 1,603 -51 -3.1% -0.8% Federal Agencies/Departments 9,537 9,224 9,031 8,971 9,258 -279 -2.9% -0.7%  Military\National Security 10,305 9,196 9,306 9,499 9,674 -631 -6.1% -1.6%  Hospitals 1,043 1,033 1,026 1,028 1,027 -17 -1.6% -0.4%  Postal Service 6,287 6,356 6,496 6,414 6,022 -265 -4.2% -1.1%  Other Federal 1,675 1,608 1,936 1,797 1,825 150 9.0% 2.2% State Agencies/Departments 20,789 17,371 18,147 22,320 23,155 2,366 11.4% 2.7%  Correctional Institutions 14,166 13,362 13,085 16,217 15,992 1,827 12.9% 3.1%  Hospitals 1,993 2,009 1,885 1,926 1,886 -107 -5.4% -1.4%  Elementary and Secondary Schools 73 73 73 73 73 0 0.0% 0.0%  Colleges and Universities 3,927 4,052 4,160 4,402 4,418 491 12.5% 3.0%  Other Agencies/Departments 328 328 328 328 328 0 0.0% 0.0% Local Agencies/Departments 29,041 28,599 30,620 28,058 26,301 -2,740 -9.4% -2.4%  Hospitals 10,641 10,847 11,106 11,850 11,926 1,284 12.1% 2.9%  Utilities 2,856 3,442 3,511 2,863 3,305 449 15.7% 3.7%  Elementary and Secondary Schools 102,182 104,744 106,225 108,270 109,719 7,537 7.4% 1.8%  Junior Colleges 7,777 8,077 8,569 9,016 10,370 2,593 33.3% 7.5%  Other local agencies 1,843 1,614 1,638 1,106 1,886 43 2.3% 0.6% Private 121,902 129,469 150,588 163,447 163,607 41,705 34.2% 7.6% 

Public 224,464 221,934 227,141 234,138 237,165 12,701 5.7% 1.4% Total 346,366 351,403 377,728 397,585 400,772 54,406 15.7% 3.7% 

Source: ADE, Inc., based on US Bureau of Labor Statistics 
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In Table 4 below we profile economic characteristics of affected industries in greater depth. For 

private sector industries, revenue estimates are based on US Economic Census 2002 data for the 

eight county region, which was adjusted to 2008 based on 2002 revenue per worker ratios adjusted 

for inflation. For federal agencies, revenues are based on federal budget issued by the White 

House/US Congress in 2008, as well as US Statistical Abstract. Revenue estimates for the State of 

California are from the California Legislative Analysts Office. Revenue estimates for local 

governments (except schools, hospitals, and utilities) are based ratio of $127,272 per worker. Data 

for hospitals are based on Economic Census 2002, whereas revenue estimates for utilities are based 

on Public Sector Economic Census 2002. School revenue figures come from the socioeconomic 

impact analysis for the school bus rule, adjusted for inflation. The table below includes net profits

for public sector elementary/secondary schools. In reality, these figures are not net profit but rather 

estimated amount of fund balances/reserves carried by public schools in the region. By state law, 

school districts are supposed to carry fund balances/reserves that amount to at least three percent of

expenditures. While the report analyzes impacts to elementary and secondary schools, as well as 

junior colleges and colleges/universities, trade schools and technical educational institutions are not 

included. Whereas elementary/secondary, junior colleges, and universities tend to be stand-alone 

facilities and campuses, technical and trade schools tend to share buildings with other businesses, 

meaning that units costs of control measures contemplated in Rule 4308 are shared with other 

businesses. 
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TABLE 4. ECONOMIC PROFILE: PRIVATE/PUBLIC INDUSTRIES POTENTIALLY SUBJECT TO PROPOSED AMENDMENTS TO RULE 4308: 2008 

2008 

Establishments Employment 

Average 

Employment Payroll 

Average 

Wage 

Aggregate 

Revenues (est.) 

Aggregate Net 

Profit (est.) 

Private Food Production 3111 176 1,911 11 64,512,676 33,757 12,280,834,504 532,361,669  Petroleum Refineries 32111 6 637 106 82,445,713 129,428 2,631,319,832 168,930,700  General Merchandise Stores 4521 167 25,636 153 472,320,463 18,424 5,483,305,220 149,554,525  Elementary and Secondary Schools 6111 92 2,590 28 75,175,307 29,026 310,789,831 21,054,573  Junior Colleges 6112 12 971 81 35,514,624 36,594 116,460,000 7,889,626  Universities/College 6113 35 2,252 65 59,907,340 26,605 270,210,732 18,305,527  Hospitals 6221 94 45,614 488 2,741,369,708 60,099 5,975,863,381 

 Hotels/Motels 7211 183 495 3 7,055,121 14,266 558,778,266 26,560,063 

 Room/Boarding Houses 7213 1,787 32,481 18 491,469,996 15,131 4,120,375,954 196,524,532  Limited Service Restaurants 7222 2,127 38,969 18 492,948,348 12,650 1,675,454,882 72,044,560  Drycleaning/Laundry Services 8123 219 2,644 12 71,066,776 26,879 191,273,685 10,188,791  Religious Organizations 8131 170 1,603 9 32,399,788 20,213 74,207,194 Federal Agencies/Departments 171 9,258 54 496,682,020 53,649 3,937,895,180 

 Military/National Security 19 9,674 509 723,512,872 74,786 8,629,450,085  Hospitals 3 1,027 342 42,838,865 41,726 146,981,460  Postal Service 196 6,022 31 298,080,495 49,499 599,598,542  Other Federal 36 1,825 51 64,986,564 35,603 776,413,484 State Agencies/Departments 642 23,155 36 299,697,311 12,943 3,538,375,846  Correctional Institutions 451 15,992 35 773,833,752 48,388 2,435,289,935  Hospitals 55 1,886 34 18,075,813 9,583 270,054,572  Elementary and Secondary Schools 2 73 37 3,131,422 42,701 9,077,852 499,601  Colleges and Universities 355 4,418 12 187,676,706 42,483 350,505,617  Other Agencies/Departments 3 328 109 1,591,439 4,859 50,045,971 Local Agencies/Departments 243 26,301 108 1,361,180,728 51,753 3,347,446,221  Hospitals 14 11,926 852 596,699,194 50,035 1,707,323,274  Utilities 148 3,305 22 180,536,250 54,631 931,005,585  Elementary and Secondary Schools 1,780 109,719 62 4,685,139,915 42,701 13,582,010,590 747,487,545  Junior Colleges 24 10,370 432 440,546,085 42,483 82,959,075  Other local agencies 208 1,886 9 160,206,434 84,956 240,004,545 Source: ADE, Inc., based on US Bureau of Labor Statistics, US Economic Census, and US Public Sector Census 
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6. SOCIO-ECONOMIC IMPACTS 

This section of the report compares the economic characteristics of affected industries 

against the annual compliance costs. The first part of this section discusses annual 

compliance costs. Section 6.2 discusses general business responses to compliance costs. 

Section 6.3 analyzes the socioeconomic impacts of the proposed amendments to Rules 4308. 

6.1 COMPLIANCE COST ESTIMATES 

Table 5 summarizes the estimated annualized costs associated with proposed amendments to 

Rule 4308. The table includes cost estimates issued by the District. The annual cost of units 

with a heat input rating between 0.075 MMBtu/hr and 0.40 MMBtu/hr is estimated to range 

from a low of $287 to a high of $1,468. Annual cost of units with a heat input rating 

between 0.40 MMBtu/hr and 2.0 MMBtu/hr will range between $1,468 and $3,510 per year. 

TABLE 5 ESTIMATED ANNUALIZED COSTS PER UNIT 

Unit Size 

(MMBtu/hr) 

Range of Annualized 

Cost ($/yr) 

>0.075 to <0.4 $287- $1,468 

≥ 0.4 to <2.0 $1,468 – $3,510 

Source: San Joaquin Valley Unified Air Pollution Control District 

It is important to note that based on a SCAQMD study, the average useful life of boilers, 

with a rated heat input between 0.4 and 2.0 MMBtu/hr is 15 years. Comments received and 

research points toward the useful life of units in this size category to be between 7yrs – 30 

yrs. Businesses and operators may already be replacing units in this size category as 

frequently as 15 years. Therefore, the compliance costs for this rule may not be as 

significant, especially with many units available that are below the average cost used for the 

analysis. 
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6.2 BUSINESS RESPONSES TO COMPLIANCE COSTS 

Industries impacted by the proposed amendments may respond in a variety of ways when 

faced with new regulatory costs. These responses may range from simply absorbing the costs 

and accepting a lower rate of return, to shutting down the affected business operation 

altogether and, where practical, shift from lower-value to higher-value product and or 

service. Impacted industries might also seek to pass costs to users of services or purchasers 

of goods. Affected sources may also seek to renew efforts to increase productivity and 

reduce costs elsewhere in their operation in order to recoup the regulatory costs and 

maintain profit levels. 

6.3 IMPACTS ON AFFECTED INDUSTRIES 

This section of the report analyzes estimated after tax net profits of affected industries 

against anticipated costs associated with implementation of proposed amendments to Rule 

4308. 

SOCIO-ECONOMIC ANALYSIS AND SMALL BUSINESS DISPROPORTIONATE 

IMPACT ANALYSIS: INDUSTRIES AFFECTED BY PROPOSED AMENDMENTS TO 

RULE 4308 

As Tables 6 shows, annual costs stemming from the proposed project when expressed as a 

ratio of net profit are below the ten-percent threshold used for purposes of determining 

whether costs are significant. With respect to public schools, annual costs are compared 

against estimated fund balance/reserves, which by state law is required to be at least three 

percent of total expenditures. In aggregate, we estimated local public schools are 

maintaining reserve levels of 5.5 percent. At 0.068 percent to 0.84 percent, annual costs 

stemming from the proposed amendments do not impact local public schools’ estimated 

reserves in any significant manner. Local governments are also not significantly impacted, 

when annual costs are compared against estimated revenues. Impacts to local governments 

amount to 0.002 percent to 0.03 percent of estimated revenues. 

It is important to note that the table below shows limited service restaurants as experiencing 

cost-to-net profit ratios above the ten-percent threshold, at 10.4 percent. In all likelihood, a 

limited service restaurant would not require a unit with a heat input rating of 2.00 

MMBtu/hr. 
 24 Final Staff Report with Appendices inal Staff Report with Appendices 

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TABLE 6. SOCIOECONOMIC IMPACT ANALYSIS OF PROPOSED AMENDMENTS TO RULE 4308 

0.075 MMBtu/hr TO 0.400 MMBtu/hr 0.400 MMBtu/hr TO 2.000 MMBtu/hr 

0.075 

MMBtu/hr 

Aggregate 

Cost 

Low Cost 

As 

Percent 

of Net 

Profits 

0.400 

MMBtu/hr 

Aggregate 

Cost 

Low Cost 

As 

Percent 

of Net 

Profits 

0.400 

MMBtu/hr 

Aggregate 

Cost 

High Cost 

As 

Percent 

of Net 

Profits 

2.000 

MMBtu/hr 

Aggregate 

Cost 

High Cost 

As 

Percent 

of Net 

Profits 

Private Food Production $287 $50,440 0.009% $1,468 $258,001 0.05% $1,468 $258,001 0.05% $3,510 $616,883 0.12%  Petroleum Refineries $287 $1,722 0.001% $1,468 $8,808 0.01% $1,468 $8,808 0.01% $3,510 $21,060 0.01%  General Merchandise Stores $287 $48,001 0.032% $1,468 $245,523 0.16% $1,468 $245,523 0.16% $3,510 $587,048 0.39%  Elementary and Secondary Schools $287 $26,261 0.125% $1,468 $134,322 0.64% $1,468 $134,322 0.64% $3,510 $321,165 1.53%  Junior Colleges $287 $3,444 0.044% $1,468 $17,616 0.22% $1,468 $17,616 0.22% $3,510 $42,120 0.53%  Universities/College $287 $9,902 0.054% $1,468 $50,646 0.28% $1,468 $50,646 0.28% $3,510 $121,095 0.66%  Hospitals $287 $26,835 0.000% $1,468 $137,258 0.00% $1,468 $137,258 0.00% $3,510 $328,185 0.01%  Hotels/Motels $287 $52,521 0.198% $1,468 $268,644 1.01% $1,468 $268,644 1.01% $3,510 $642,330 2.42%  Room/Boarding Houses $287 $512,726 0.261% $1,468 $2,622,582 1.33% $1,468 $2,622,582 1.33% $3,510 $6,270,615 3.19%  Limited Service Restaurants $287 $610,449 0.847% $1,468 $3,122,436 4.33% $1,468 $3,122,436 4.33% $3,510 $7,465,770 10.36%  Drycleaning/Laundry Services $287 $62,925 0.618% $1,468 $321,859 3.16% $1,468 $321,859 3.16% $3,510 $769,568 7.55%  Religious Organizations $287 $48,790 0.066% $1,468 $249,560 0.34% $1,468 $249,560 0.34% $3,510 $596,700 0.80% Federal Agencies/Departments $287 $49,077 0.001% $1,468 $251,028 0.01% $1,468 $251,028 0.01% $3,510 $600,210 0.02%  Military/National Security $287 $5,453 0.000% $1,468 $27,892 0.00% $1,468 $27,892 0.00% $3,510 $66,690 0.00%  Hospitals $287 $861 0.001% $1,468 $4,404 0.00% $1,468 $4,404 0.00% $3,510 $10,530 0.01%  Postal Service $287 $56,180 0.009% $1,468 $287,361 0.05% $1,468 $287,361 0.05% $3,510 $687,083 0.11%  Other Federal $287 $10,332 0.001% $1,468 $52,848 0.01% $1,468 $52,848 0.01% $3,510 $126,360 0.02% State Agencies/Departments $287 $184,254 0.005% $1,468 $942,456 0.03% $1,468 $942,456 0.03% $3,510 2,253,420 0.06%  Correctional Institutions $287 $129,365 0.005% $1,468 $661,701 0.03% $1,468 $661,701 0.03% $3,510 1,582,133 0.06%  Hospitals $287 $15,785 0.006% $1,468 $80,740 0.03% $1,468 $80,740 0.03% $3,510 $193,050 0.07%  Elementary and Secondary Schools $287 $574 0.115% $1,468 $2,936 0.59% $1,468 $2,936 0.59% $3,510 $7,020 1.41%  Colleges and Universities $287 $101,885 0.029% $1,468 $521,140 0.15% $1,468 $521,140 0.15% $3,510 $1,246,050 0.36%  Other Agencies/Departments $287 $861 0.002% $1,468 $4,404 0.01% $1,468 $4,404 0.01% $3,510 $10,530 0.02% Local Agencies/Departments $287 $69,669 0.002% $1,468 $356,357 0.01% $1,468 $356,357 0.01% $3,510 $852,053 0.03%  Hospitals $287 $4,018 0.000% $1,468 $20,552 0.00% $1,468 $20,552 0.00% $3,510 $49,140 0.00%  Utilities $287 $42,404 0.005% $1,468 $216,897 0.02% $1,468 $216,897 0.02% $3,510 $518,603 0.06%  Elementary and Secondary Schools $287 $510,932 0.068% $1,468 $2,613,407 0.35% $1,468 $2,613,407 0.35% $3,510 $6,248,678 0.84%  Junior Colleges $287 $6,888 0.008% $1,468 $35,232 0.04% $1,468 $35,232 0.04% $3,510 $84,240 0.10%  Other local agencies $287 $59,696 0.025% $1,468 $305,344 0.13% $1,468 $305,344 0.13% $3,510 $730,080 0.30% 
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As indicated in the table above, industries across the board are not significantly impacted by 

the rule. In the table below, we organize industries in Table 6 by number of workers, to 

determine if small businesses are disproportionately impacted by the proposed amendments. 

Impacts across the board for industries of all sizes are less than significant, meaning that 

small businesses are not disproportionately impacted by the proposed amendments to Rule 

4308. In preparing this small business impact analysis, we assume that businesses 

employment between one and 49 workers will operate units with a heat input rating of 0.075 

MMBtu/hr. Businesses employing between 50 and 249 workers operate units a heat input 

rating of 0.400 MMBtu/hr. Business with more than 500 workers operate units with heat 

input rating of less than 2.000 MMBtu/hr. 
 26 Final Staff Report with Appendices inal Staff Report with Appendices 

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TABLE 7. DISTRIBUTION OF INDUSTRIES BY SIZE IN TERMS OF NUMBER OF WORKERS: SAN JOAQUIN VALLEY REGION, 2008 

Regional Establishments By Size 1 - 4 5 - 9 10 - 19 20 - 49 50 - 99 100 - 249 250 - 499 500 - 999 

1000 - 

1499 

1500 - 

2499 

2500 - 

4999 

Private Food Production 3111 44 15 19 34 24 21 9 6 1 2 0 

 Petroleum Refineries 32111 0 2 0 2 1 1 0 0 0 0 0  General Merchandise Stores 4521 42 9 26 21 19 35 15 0 0 0 0  Elementary and Secondary Schools 6111 39 22 13 11 6 1 0 0 0 0 0  Junior Colleges 6112 0 0 0 4 8 0 0 0 0 0 0  Universities/College 6113 8 3 11 3 3 3 3 0 0 3 0  Hospitals 6221 2 0 2 2 4 19 19 19 12 6 8  Hotels/Motels 7211 67 26 49 32 4 5 0 0 0 0 0  Room/Boarding Houses 7213 968 447 149 223 0 0 0 0 0 0 0  Limited Service Restaurants 7222 700 357 423 521 100 25 1 0 0 0 0  Drycleaning/Laundry Services 8123 112 49 33 14 6 3 2 0 0 0 0  Religious Organizations 8131 100 35 19 12 3 2 0 0 0 0 0 Source: ADE, Inc. based on US Bureau of Labor Statistics and US Census County Business Patterns 

TABLE 8. SOCIOECONOMIC IMPACT ANALYSIS OF PROPOSED AMENDMENTS TO RULE 4308: SMALL BUSINESS DISPROPORTIONATE IMPACT 

ANALYSIS 

Regional Costs-to-Net Profits By Size 1 - 4 5 - 9 10 - 19 20 - 49 50 - 99 100 - 249 250 - 499 500 - 999 

1000 - 

1499 

1500 - 

2499 

2500 - 

4999 

Private Food Production 3111 0.53% 0.15% 0.07% 0.03% 0.07% 0.03% 0.03% 0.02% 0.01% 0.01% 

 Petroleum Refineries 32111 0.01% 0.00% 0.00% 0.00%  General Merchandise Stores 4521 1.43% 0.41% 0.19% 0.08% 0.20% 0.08% 0.09% 0.05%  Elementary and Secondary Schools 6111 1.43% 0.41% 0.19% 0.08% 0.19% 0.08% 0.09% 0.05% 0.02%  Junior Colleges 6112 0.07% 0.19%  Universities/College 6113 5.17% 1.48% 0.69% 0.28% 0.71% 0.30% 0.34% 0.07%  Hospitals 6221 0.19% 0.03% 0.01% 0.03% 0.01% 0.01% 0.01% 0.00% 0.00% 0.00%  Hotels/Motels 7211 1.85% 0.53% 0.25% 0.10% 0.25% 0.11%  Room/Boarding Houses 7213 1.14% 0.32% 0.15% 0.06%  Limited Service Restaurants 7222 8.33% 2.38% 1.11% 0.45% 1.14% 0.49% 0.54%  Drycleaning/Laundry Services 8123 4.60% 1.31% 0.61% 0.25% 0.63% 0.27% 0.30%  Religious Organizations 8131 0.36% 0.10% 0.05% 0.02% 0.05% 0.02% 0.02% 0.01% Source: ADE, Inc.