1 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

FINAL STAFF REPORT 

Amendments to Rule 4308 

(Boilers, Steam Generators, and Process Heaters – 0.075 MMBtu/hr 

to less than 2.0 MMBtu/hr) 

November 14, 2013 

Prepared by: Chelsea Gonzales, Air Quality Specialist

Reviewed by: Anna Myers, Senior Air Quality Specialist 

 Stanley Tom, Senior Air Quality Engineer 

 Mike Oldershaw, Air Quality Compliance Manager 

 Jessi Fierro, Program Manager, Strategies and Incentives 

 Errol Villegas, Program Manager, Strategies and Incentives 

 Samir Sheikh, Director, Strategies and Incentives 

I. SUMMARY 

The purpose of this rule amending project is to fulfill a commitment from the San 

Joaquin Valley Air Pollution Control District’s (District’s) 2012 PM2.5 Plan by making the 

requirements of Rule 4308 (Boilers, Steam Generators, and Process Heaters – 0.075 

MMBtu/hr to less than 2.0 MMBtu/hr) more stringent and to improve rule clarity. Rule 

4308 is the District’s point-of-sale rule that reduces oxides of nitrogen (NOx) and carbon 

monoxide (CO) emissions from boilers, steam generators, and process heaters with a 

rated heat input capacity of 0.075 to less than 2.0 million British thermal units per hour 

(MMBtu/hr). 

During plan development, the District identified an opportunity to lower the NOx 

emission limit for natural gas-fired instantaneous water heaters with a rated heat input of 

0.075-0.4 MMBtu/hr (instantaneous units) from 55 parts per million by volume (ppmv) to 

20 ppmv. The 20 ppmv compliant instantaneous units are readily available throughout 

California (including the San Joaquin Valley (Valley)) and are cost effective; as such, the 

District is lowering the NOx emission limit for these units through this rule amendment 

project. The District is also clarifying the applicability of Rule 4308 by adding specific 

exemption language for hot water pressure washers that are currently exempt from the 

rule. 

Rule amendments will contribute to the Valley’s progress towards attainment of federal 

air quality standards for particulate matter that is 2.5 microns or less in diameter 

(PM2.5) and ozone by reducing NOx, which is a precursor for both PM2.5 and ozone. 

Amendments to Rule 4308 will reduce 1.82 tons per year (tpy) of NOx emissions from 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

2 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

instantaneous units upon full rule implementation. In addition, this rule amendment will 

ensure that Rule 4308 is as stringent as similar rules in other California air districts and 

satisfies Reasonably Available Control Technology (RACT) requirements.

II. PROJECT BACKGROUND 

A. Source Category 

As a point-of-sale rule, Rule 4308 applies to any person who supplies, sells, offers for 

sale, installs, or solicits the installation of boilers, steam generators, and process 

heaters with a rated heat input of 0.075 MMBtu/hr to less than 2.0 MMBtu/hr. These 

units are used in commercial settings and some larger homes. Affected persons 

include water heater manufacturers, plumbing wholesalers, supply stores, plumbers, 

contractors, and end-users. This point-of-sale approach allows the District to achieve 

NOx emission reductions without forcing immediate replacement of existing units to 

comply with rule requirements and thus placing an undo financial burden on the 

consumer. 

The most significant rule amendment applies specifically to instantaneous units. 

Instantaneous units, also known as tankless water heaters, generate hot water only as it 

is needed. They do not produce the standby energy losses associated with storage, or 

tank-style, water heaters since they only heat water when it flows through a heat 

exchanger, and are thus promoted as energy efficient devices.1 Instantaneous units of 

this size range are used in settings including, but not limited to, apartment buildings, 

large homes, small businesses, commercial buildings, manufacturing facilities, 

government facilities, restaurants, hotels, hospitals, educational institutions, and 

religious organizations. 

Instantaneous units have an estimated lifetime of 20 years.2

 Therefore, the emissions 

reduced from these units will occur over 20 years, from 2015 through 2034, as existing 

instantaneous units are replaced with newer instantaneous units, new instantaneous 

units are purchased for new developments, and some end-users switch from tank-style 

to instantaneous units. 

B. Number of Units Affected by Rule Amendments 

Since rule implementation will occur from 2015 through 2034, the District projected the 

number of instantaneous units in the Valley in 2034. The District estimates that there 

will be 1,678 instantaneous units in 2034. To determine the number of units in the 

Valley affected by the rule amendments, the District calculated an average population-

 

1

 Rinnai Tankless Water Heaters. (2013). Retrieved April 17, 2013 from http://www.rinnai.us/tankless-waterheater/how-tankless-works 

2

 United States Department of Energy [DOE]: Tankless or Demand-Type Water Heaters. (2012). Retrieved June 11, 

2013 from http://energy.gov/energysaver/articles/tankless-or-demand-type-water-heaters
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

3 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

to-unit ratio of one natural gas-fired unit with a rated heat input of 0.075-0.4 MMBtu/hr 

for every 385 people, using population data from the South Coast Air Quality 

Management District (SCAQMD)3

 and their estimate for the total number of units in this 

size category.4 Using this ratio and a population estimate of 4.33 million people in the 

Valley in 2015,5 the District estimates that there will be 11,247 natural gas-fired units 

with a rated heat input of 0.075-0.4 MMBtu/hr in the Valley in 2015. 

Only a fraction of the 11,247 natural gas-fired water heaters are instantaneous units, as 

most of the natural gas units sold are storage water heaters. The Department of 

Energy’s 2009 Water Heater Market Profile estimated that of water heaters sold 3% are 

natural gas-fired instantaneous units, 48% are natural gas-fired storage units, and the 

remaining 49% are electric units.6

 Natural gas-fired instantaneous units make up 5.9% 

of the natural gas-fired water heater market; as such, the District estimates that there 

will be 664 instantaneous units in the Valley in 2015. 

An increasing number of commercial developments and large residences are being built 

with instantaneous water heaters due to the increased fuel and energy efficiency that 

these units provide over typical tank-style water heaters. Similarly, some existing 

commercial businesses and residents are replacing tank-style units with instantaneous 

units because of the added efficiency benefits. Various sources estimate that in future 

years, instantaneous water heaters will have an annual growth rate of 4-10%.7,8 To 

remain conservative, the District assumes an annual 5% growth rate for the inventory of 

instantaneous units in the Valley. Using the annual growth rate and 2015 inventory of 

instantaneous units, the District projects that the total number of instantaneous units in 

the Valley in 2034 will be 1,678 units. 

As these sources are not permitted or registered, the estimated number of units subject 

to these rule amendments has been determined using the best available data. 

 

3

 SCAQMD: About South Coast AQMD. (2012, October 9). Retrieved May 7, 2013 from 

http://www.aqmd.gov/aqmd/index.html 

4

 SCAQMD. (2006, May 5). Staff Report for Proposed Amended Rule 1146.2- Emissions of Oxides of Nitrogen from 

Large Water Heaters and Small Boilers and Process Heaters. Diamond Bar, CA. Retrieved from 

http://www.aqmd.gov/hb/2006/may/060535a.html

5

 The Planning Center. (2012, March 27). San Joaquin Valley Demographic Forecasts 2010 to 2050. 

http://www.valleyblueprint.org/files/San%20Joaquin%20Valley%20Demographic%20Forecasts%20-

%20Final%2027%20Mar%202012_0.pdf

6

 Department of Energy [DOE]. (September 2009). Water Heater Market Profile. Retrieved from 

http://www.energystar.gov/ia/partners/prod_development/new_specs/downloads/water_heaters/Water_Heater_Marke

t_Profile_Sept2009.pdf 

7

 California Utilities Statewide Codes and Standards Team. (October 2011). 2013 California Building Energy 

Efficiency Standards. 

http://www.energy.ca.gov/title24/2013standards/prerulemaking/documents/current/Reports/Residential/Water_Heatin

g/2013_CASE_WH2.WH5_WaterHeaterReady-10.28.2011.pdf 

8

 CenterPoint Energy. (2009). Vertical Subdivision Workshop: Tankless Water Heaters. 

http://www.centerpointenergy.com/staticfiles/CNP/Common/SiteAssets/doc/Tankless%20Water%20HeatersRheem.pdf 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

4 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

C. Current Rule 

The purpose of Rule 4308 is to limit NOx and CO emissions from large water heaters 

and small boilers with a rated heat input of 0.075 MMBtu/hr to less than 2.0 MMBtu/hr. 

The rule currently requires that no person supply, sell, offer for sale, install, or solicit the 

installation of any natural gas-fired unit within the Valley that exceeds a NOx emission 

limit of 20 ppmv, except instantaneous water heaters and pool heaters with a rated heat 

input of 0.075-0.4 MMBtu/hr that currently have a NOx emission limit of 55 ppmv. 

Rule 4308 also requires that manufacturers of units subject to this rule certify their units 

through either the District’s certification program, the SCAQMD certification process for 

SCAQMD Rule 1146.2, or another emission certification program approved by the 

United States Environmental Protection Agency (EPA) and District’s Air Pollution 

Control Officer. Both the SCAQMD and District certification processes require that the 

manufacturer obtain a certification source test from an independent testing laboratory 

for each unit, in order to verify compliance with the applicable emission limits. The 

manufacturer is then required to submit the certification source test as part of a 

compliance report that identifies the manufacturer, brand name, model number, and 

description of the unit being certified. SCAQMD has worked extensively with 

manufacturers subject to SCAQMD Rule 1146.2 to certify thousands of units and 

provides the complete list of certified units on their website for reference.9

 

The District’s Governing Board adopted amendments to Rule 4308 on December 17, 2009 

to incorporate the 20 ppmv NOx emission limits mentioned above. The District submitted 

the amended rule to the California Air Resources Board (ARB) for forwarding to the 

EPA as an amendment to the State Implementation Plan (SIP) in 2010. EPA finalized 

approval of Rule 4308 on January 31, 2011 and found it to be at least as stringent as 

established RACT requirements.10

D. Similar Rules in Other Air Districts 

The District compared Rule 4308 to the following analogous rules in other air districts: 

• Bay Area Air Quality Management District (BAAQMD) Regulation 9, Rule 6 (Rule 

09-06) (Nitrogen Oxides Emissions from Natural Gas-Fired Boilers and Water 

Heaters)11

 

9

 SCAQMD. (2013, July 9). List of Certified Units Pursuant to Rule 1146.2. Diamond Bar, CA. Retrieved from 

http://www.aqmd.gov/rules/doc/r1146/r1146_2table.pdf

10 Revisions to the California State Implementation Plan, San Joaquin Valley Unified Air Pollution Control District, 76 

Fed. Reg. 20, pp. 5276-5277. (2011, January 31). (to be codified at 40 C.F.R. pt. 52) 

http://www.gpo.gov/fdsys/pkg/FR-2011-01-31/pdf/2011-1927.pdf

11 Bay Area Air Quality Management District [BAAQMD]. (2007, November 7). Regulation 9 Inorganic Gaseous 

Pollutants, Rule 6 Nitrogen Oxides Emissions from Natural Gas-Fired Boilers and Water Heaters. Retrieved from 

http://www.baaqmd.gov/~/media/Files/Planning%20and%20Research/Rules%20and%20Regs/reg%2009/rg0906.ash

x?la=en
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

5 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

• Sacramento Metropolitan Air Quality Management District (SMAQMD) Rule 411 

(NOx from Boilers, Process Heaters and Steam Generators)12

• SMAQMD Rule 414 (Water Heaters, Boilers and Process Heaters Rated Less 

Than 1,000,000 BTU Per Hour)13

• SCAQMD Rule 1146.2 (Emissions of Oxides of Nitrogen From Large Water 

Heaters and Small Boilers and Process Heaters)14

• Ventura County Air Pollution Control District (VCAPCD) Rule 74.11.1 (Large 

Water Heaters and Small Boilers)15

 

Units subject to Rule 4308 and these aforementioned rules in other air districts have 

emission limits based on two size categories: units with a rated heat input of 0.075-0.4 

MMBtu/hr and units with a rated heat input greater than 0.4 but less than 2.0 MMBtu/hr. 

Rule 4308 currently enforces a 20 ppmv NOx emission limit for all natural gas-fired 

water heaters with a rated heat input greater than 0.4 but less than 2.0 MMBtu/hr, which 

is equivalent to the limits in these other California air districts’ rules. 

Analogous rules in BAAQMD, SCAQMD, and VCAPCD have a 20 ppmv NOx emission 

limit for instantaneous units with a rated heat input of 0.075-0.4 MMBtu/hr, whereas Rule 

4308 contains a NOx emission limit of 55 ppmv for these units. The 20 ppmv limit was 

implemented in SCAQMD in 2012 and BAAQMD in 2013, and will be implemented in 

VCAPCD in 2014. 

The District also compared the CO emission limit in Rule 4308 to the aforementioned air 

districts’ rules. The District’s emission limit of 400 ppm is equivalent to the CO emission 

limits in these other air districts’ rules and it applies to the same size category of units 

specified within those rules. Therefore, aside from the NOx emission limit for 

instantaneous units, current Rule 4308 is as stringent as or more stringent than other air 

districts’ rules. 

E. Control Technologies 

Instantaneous units are designed and manufactured with low NOx burner systems in 

order to meet specific NOx emission limits, such as the existing Rule 4308 NOx 

emission limit of 55 ppmv. The instantaneous units that meet a 20 ppmv NOx emission 

limit are equipped with ultra-low NOx burners. As this rule is a point-of-sale rule, retrofit 

of currently installed instantaneous units will not be required. 

 

12 Sacramento Metropolitan Air Quality Management District [SMAQMD]. (2007, August 23). Rule 411, NOx from 

Boilers, Process Heaters, and Steam Generators. Retrieved from http://airquality.org/rules/rule411.pdf 

13 SMAQMD. (2010, March 25). Rule 414, Water Heaters, Boilers and Process Heaters Rated Less Than 1,000,000 

BTU Per Hour. Retrieved from http://airquality.org/rules/rule414.pdf 

14 SCAQMD. (2006, May 5). Rule 1146.2 (Emissions of Oxides of Nitrogen from Large Water Heaters and Small 

Boilers and Process Heaters). Retrieved from http://www.aqmd.gov/rules/reg/reg11/r1146-2.pdf 

15 Ventura County Air Pollution Control District [VCAPCD]. (2012, September 11). Rule 74.11.1—Large Water 

Heaters and Small Boilers. Retrieved from http://vcapcd.org/Rulebook/Reg4/RULE%2074.11.1.pdf 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

6 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

The District researched whether pool heater technology has also advanced to achieve a 

20 ppmv NOx emission limit. Water heater manufacturers and staff at SCAQMD 

indicated that there are no known pool heaters with a rated heat input of 0.075-0.4 

MMBtu/hr that are capable of meeting a 20 ppmv NOx emission limit. All pool heaters 

certified through SCAQMD are certified to meet a 55 ppmv NOx emission limit. The 

District is upholding the current NOx emission limit for pool heaters in this size range to 

maintain the lowest feasible limit and stay consistent with other air districts’ rules. 

The District did not propose the addition of any PM2.5 or sulfur dioxide (SO2) emission 

limits or requirements, as found in other District combustion rules, because there are no 

known units with a rated heat input of 0.075-2.0 MMBtu/hr that operate with PM2.5 or 

SO2 emission control devices (such as baghouses, electrostatic precipitators, and 

scrubbers). These technologies have not been demonstrated or achieved-in-practice 

for units smaller than 5 MMBtu/hr.16 Units this small are fired on natural gas, propane, 

liquefied petroleum gas, or low sulfur diesel fuel and already emit very low levels of 

PM2.5 and SO2. 

III. AMENDMENTS TO RULE 4308 

A. Overview of Amendments 

The District is making the following amendments to Rule 4308: 

• Lowering the NOx emission limit for instantaneous units from 55 ppmv to 20 ppmv 

• Addition of an exemption for hot water pressure washers 

• Removal of redundant and expired language 

• Clarifications to existing rule language in Sections 1.0, 3.0, and 6.0 

B. Amended Rule 4308 

The following discussion details the amendments to Rule 4308. See amended Rule 

4308 for exact language. 

Section 1.0 Purpose 

Language is added to this section to clarify that this rule also limits CO emissions. 

 

16 SJVAPCD. (2012, December 20). Appendix D (Stationary and Area Source Control Strategy Evaluation), 2012 

PM2.5 Plan. Fresno: CA. Retrieved from http://www.valleyair.org/Workshops/postings/2012/12-20-

12PM25/FinalVersion/14AppendixDStationaryandArea.pdf
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

7 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

Section 3.0 Definitions 

To improve rule clarity, the definitions of “EPA,” “SCAQMD,” and “hot water pressure 

washer” are added to rule language, and the definition of “PUC Quality Natural Gas” 

has been moved. 

Section 4.0 Exemptions 

To clarify current rule applicability, an exemption for hot water pressure washers is 

added to this section. In 2011, a pressure washer manufacturer notified the District that 

per the current definition of an instantaneous water heater, hot water pressure washers 

could be misinterpreted as being classified under this source category. 

Similar to instantaneous units, the water for hot water pressure washers is only heated 

when it flows through the heat exchanger. These units are used in various industries, 

including food processing, construction, and transportation industries. The pressure 

washers are used to clean and degrease machinery, vehicles, work surfaces, and 

floors. As such, most units are portable and are fired on diesel fuel since it is more 

readily available and practical for portable uses than natural gas. 

Since most hot water pressure washers are portable, it is not possible to incorporate 

add-on NOx controls. For the few stationary units that may be in operation, the rated 

heat input capacity is so small that add-on controls are not feasible. Without the use of 

add-on controls, hot water pressure washers are unable to meet the emission limits of 

Rule 4308. In addition, these units are generally only used for a couple of hours a day. 

Pressure washers are equipped with trigger guns, which stop the flow of water when not 

needed and limit heating and fuel burning processes. The NOx emissions from hot 

water pressure washers are very small. There is currently one 0.166 MMBtu/hr hot 

water pressure washer permitted in the Valley, and based on the current NOx emission 

limit within that permit, the unit would emit at most 0.13 pounds of NOx per day, 

assuming an unrealistic worst case scenario that the unit runs for 24 hours a day. 

Diesel fuel-fired water heaters of all sizes are required to obtain a permit for their units 

per District Rule 2201 (New and Modified Stationary Source Review Rule) and 

implement Best Available Control Technology (BACT) requirements. An exemption 

from Rule 4308 does not remove the requirement for diesel-fired hot water pressure 

washers to obtain a permit and implement the most stringent controls possible via Rule 

2201. 

The District examined whether other air districts regulate hot water pressure washers 

through their analogous rules and found that none of the rules identified in Section II.D 

specifically address these units. The SCAQMD, BAAQMD, and VCAPCD rules only 

apply to natural gas-fired units, and since hot water pressure washers are generally 

diesel-fired, these units would be exempt. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

8 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

Pressure washers were previously addressed in SCAQMD Rule 1147 (NOx Reductions 

from Miscellaneous Sources); they were recently removed from this rule and 

transitioned into Rule 219 (Equipment Not Requiring a Written Permit Pursuant to 

Regulation II). In the staff report for the 2013 amendment of Rule 219, SCAQMD notes 

that due to the mobile nature of power pressure washers, emission controls for these 

units are challenging, if not impossible.17 As a result, Rule 219 exempts all diesel-fired 

pressure washers with a maximum heat input capacity of 0.55 MMBtu/hr or less; 96% of 

the permitted pressure washers in SCAQMD had rated maximum heat input capacities 

less than 0.55 MMBtu/hr. 

Section 5.0 Requirements 

The District is amending the NOx emission limit for instantaneous units with a rated heat 

input of 0.075-0.4 MMBtu/hr from 55 ppmv to 20 ppmv. Emission limits in Table 1 of 

Rule 4308 will remain in effect until December 31, 2014. On and after January 1, 2015, 

Table 2 emission limits will be implemented. Table 2 of Rule 4308 reflects the new NOx 

emission limit for these instantaneous units; see below. 

Table 2 for Rule 4308 NOx Emission Limits 

 

17 SCAQMD. (2013, May 3). Staff Report for Proposed Amended Rule 219- Equipment Not Requiring a Written 

Permit Pursuant to Regulation II. Diamond Bar, CA. Retrieved from http://www.aqmd.gov/hb/attachments/2011-

2015/2013May/2013-May3-028.pdf 

Table 2 

Emission Limits (Effective on and after January 1, 2015) 

Type and Size of Unit, 

in MMBtu/hr

NOx Limit 

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

PUC Gas Non PUC Gas or Liquid 

lb/MMBtu of heat input 

(ppmv) 

lb/MMBtu of heat input 

(ppmv) 

Units greater than or equal to 0.075 

but less than or equal to 0.4, except 

as specified below 

0.024 (20) 0.093 (77) 

Units greater than 0.4 but less than 

2.0, except as specified below 0.024 (20) 0.036 (30) 

Instantaneous water heaters greater 

than or equal to 0.075 but less than 

or equal to 0.4 

0.024 (20) 0.093 (77) 

Instantaneous water heaters greater 

than 0.4 but less than 2.0 0.024 (20) 0.036 (30) 

Pool heaters greater than or equal 

to 0.075 but less than or equal to 0.4 0.068 (55) 0.093 (77) 

Pool heaters greater than 0.4 but 

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

Final Staff Report: Rule 4308 November 14, 2013 

9 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

This amendment will require that instantaneous units supplied, sold, or installed in the 

Valley after January 1, 2015 be certified to meet a 20 ppmv NOx emission limit. The 

District examined whether low NOx instantaneous units are available in the Valley. 

SCAQMD maintains a list of natural gas-fired water heater manufacturers certified to 

produce units that meet SCAQMD Rule 1146.2 emission limits.18 There are six water 

heater manufacturers that produce instantaneous units. Five of the six manufacturers 

produce 55 ppmv and 20 ppmv compliant instantaneous units, while one of the 

manufacturers no longer produces 55 ppmv compliant units and now only produces 20 

ppmv compliant instantaneous units. All six instantaneous water heater manufacturers 

confirmed to District staff that they sell 20 ppmv compliant instantaneous units to Valley 

wholesalers or water heater suppliers. These Valley wholesalers and suppliers 

generally only sell units to licensed contractors or parties qualified to correctly install the 

units. 

Section 6.0 Administrative Requirements 

Language is added to Section 6.2.3 to clarify that the SCAQMD protocol, “Nitrogen 

Oxides Emissions Compliance Testing for Natural Gas-Fired Water Heaters and Small 

Boilers,” is only applicable to natural gas-fired units. Redundant language is also 

removed from Section 6.0. 

Section 7.0 Compliance Schedule 

To improve rule clarity and simplify rule language, Section 7.0 is deleted from Rule 

4308. The compliance dates listed in this section are outdated and the new 

compliance dates are listed in Section 5.0 of the rule. 

IV. SUPPORTING ANALYSES 

A. Global Climate Change and Greenhouse Gases 

The California Global Warming Solutions Act of 2006 (AB 32) created a comprehensive, 

multi-year program to reduce greenhouse gas (GHG) emissions in California, with the 

overall goal of restoring emissions to 1990 levels by the year 2020. ARB and the State 

Legislature are developing policies and programs to implement AB 32. The District 

believes that the evidence and the rationale that climate change is occurring is 

compelling and convincing. In addition to the long-term consequences of climate 

change, the District is concerned with the potential ramifications of more moderate but 

imminent changes in weather patterns. The Valley depends heavily on agriculture for 

its economy and has developed agricultural practices based on the last several decades 

 

18 SCAQMD. (2013, July 9). List of Certified Units Pursuant to Rule 1146.2. Diamond Bar, CA. Retrieved from 

http://www.aqmd.gov/rules/doc/r1146/r1146_2table.pdf
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

10 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

of weather patterns. Unanticipated and large fluctuations in these patterns could have a 

devastating effect on the Valley’s economy. 

While there are many win-win strategies that can reduce both GHG and criteria/toxic 

pollutant emissions, when faced with situations that involve tradeoffs between the two, 

the District believes that the more immediate public health concerns that may arise from 

an increase in criteria or toxic pollutant emissions should take precedence. The District 

Governing Board adopted the Climate Change Action Plan (CCAP) in August 2008. For 

California Environmental Quality Act (CEQA) requirements, one of the goals of the 

CCAP is to establish District processes for assessing the significance of greenhouse 

gas impacts. The District has developed a policy and guidance for addressing 

greenhouse gases under CEQA. 

B. Health Benefits 

The District is a public health agency whose mission is to improve the health and quality 

of life for all Valley residents through efficient, effective and entrepreneurial air quality 

management strategies. The District periodically compiles attainment plans to identify 

individual regulations and other strategies that will achieve the emissions reductions 

needed for the Valley to meet federal health-based air quality standards (National 

Ambient Air Quality Standards, or NAAQS). Guided by its Health-Risk Reduction 

Strategy, the District develops and implements both attainment plans and regulations to 

attain the NAAQS in the quickest, most health-protective, and most cost-effective 

manner. The control strategy as a whole, then, has important public health benefits and 

health costs savings. This amendment to Rule 4308 is one component of this overall 

control strategy. Since this rule amendment reduces NOx emissions, it benefits public 

health by contributing to improved ozone and PM2.5 air quality. 

C. Emission Reduction Analysis 

As presented in the 2012 PM2.5 Plan, the annual NOx emissions from the source 

category subject to Rule 4308 were 0.71 tpd (259 tpy) in 2012. The District did not 

specify an emission reduction commitment for this rule amendment in that plan in lieu of 

conducting a more thorough emission reduction analysis in this rule amendment project. 

Rule amendments only affect a portion of the total source category; as such, the 

baseline NOx emissions from instantaneous units are 2.92 tpy. Rule amendments will 

result in approximately 1.82 tpy of NOx emission reductions after all units are replaced 

and new units are purchased within the next 20 years, reflecting a 62.3% reduction from 

this baseline. The complete Emission Reduction Analysis is presented in Appendix B of 

this Final Staff Report. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

11 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

D. Cost Effectiveness Analysis 

Pursuant to California Health & Safety Code (CH&SC) Section 40920.6(a), the District is 

required to analyze the cost effectiveness of new rules or rule amendments. The 

District has prepared a Cost Effectiveness Analysis to analyze the economic feasibility 

of the rule amendments. The estimated cost effectiveness of implementing a 20 ppmv 

NOx emission limit for instantaneous units is approximately $19,961-$52,746 per ton of 

NOx emission reductions. The differential cost for a 20 ppmv compliant instantaneous 

unit ranges from a cost savings of $45 to an increased cost of $489, making this 

amendment cost effective. The complete analysis is presented in Appendix C of this 

Final Staff Report. 

E. Socioeconomic Analysis 

Pursuant to CH&SC Section 40728.5(a), “Whenever a district intends to propose the 

adoption, amendment, or repeal of a rule or regulation that will significantly affect air 

quality or emissions limitations, that agency shall, to the extent data are available, 

perform an assessment of the socioeconomic impacts of the adoption, amendment, or 

repeal of the rule or regulation.” No significant socioeconomic impacts are expected 

from these rule amendments. The complete Socioeconomic Analysis is presented in 

Appendix D of this Final Staff Report. 

F. Rule Consistency Analysis 

Pursuant to CH&SC Section 40727.2, the District prepared a Rule Consistency Analysis 

that compares the elements of the amendments with the corresponding elements of 

other District rules and federal regulations. Amendments do not conflict with other 

District rules, or federal rules, regulations, or policies covering similar stationary 

sources. This Rule Consistency Analysis is presented in Appendix E of this Final Staff 

Report. 

G. CEQA 

Pursuant to Section 15061 of the Guidelines for Implementation of the CEQA, the District 

investigated the possible environmental impacts of the amendments to Rule 4308. Based 

on the lack of evidence to the contrary, the District has concluded that the rule 

amendments will not have any significant adverse effects on the environment. Staff 

filed a Notice of Exemption under the provisions of Public Resource Code 15061(b)(3). 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Final Staff Report: Rule 4308 November 14, 2013 

12 Final Staff Report with Appendices for 

 Amendments to Rule 4308 

V. RULE DEVELOPMENT PROCESS 

A. Public Workshop for Rule 4308 

The District held a public workshop to present, discuss, and hear comments on the draft 

rule and draft staff report on August 22, 2013. The draft rule and draft staff report were 

made available on the District’s website prior to the public workshop, and a two week 

comment period followed the public workshop. Comments received during the 

workshop and during the commenting period following the workshop were considered 

and incorporated into the proposed amendments to Rule 4308 and Final Draft Staff 

Report, as appropriate. 

Per the District’s socioeconomic policy, adopted by the Governing Board in October 

2011, District staff solicited information from stakeholders at the August 22nd workshop 

about trade organizations that represent industries affected by the rule amendment. 

Through this process, the Cleaning Equipment Trade Association was identified as an 

affected trade organization. The District also solicited feedback from affected sources 

to determine if any new Department of Transportation (DOT), Occupational Safety and 

Health Administration (OSHA), or other requirements would result from the 

amendments. Stakeholders did not identify any DOT, OSHA, or other requirements that 

would result from the rule amendments. 

B. Public Hearing for Rule 4308 

In accordance with CH&SC Section 40725, the proposed amendments to Rule 4308 

and Final Draft Staff Report were publicly noticed and made available on the District’s 

website prior to the Governing Board public hearing to consider adoption of the 

proposed rule amendments. The proposed amendments to Rule 4308, Final Draft Staff 

Report, and other supporting documents were made available for public comment on 

October 15, 2013. No comments were received during the subsequent two-week 

comment period. The public was also invited to provide comments during the public 

hearing for the adoption of the proposed rule amendments. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix A: Comments and Responses November 14, 2013 

A - 1 Final Staff Report with Appendices for 

Amendments to Rule 4308 

APPENDIX A 

Summary of Significant Comments and Responses 

For Amendments to Rule 4308 

November 14, 2013 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix A: Comments and Responses November 14, 2013 

A - 2 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank. 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix A: Comments and Responses November 14, 2013 

A - 3 Final Staff Report with Appendices for 

Amendments to Rule 4308 

SUMMARY OF SIGNIFICANT COMMENTS FOR 

PROPOSED AMENDMENTS TO RULE 4308 (BOILERS, STEAM GENERATORS, 

AND PROCESS HEATERS — 0.075 MMBTU/HR TO LESS THAN 2.0 MMBTU/HR) 

EPA REGION IX COMMENTS 

The District did not receive a comment letter from EPA. 

ARB COMMENTS 

The District did not receive a comment letter from ARB before the public hearing; 

however, a “no comment” letter was received on 11/15/13. 

STAKEHOLDER COMMENTS 

The District did not receive any comment letters from stakeholders. 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix A: Comments and Responses November 14, 2013 

A - 4 Final Staff Report with Appendices for 

Amendments to Rule 4308 

SUMMARY OF SIGNIFICANT COMMENTS FOR 

DRAFT AMENDMENTS TO RULE 4308 (BOILERS, STEAM GENERATORS, AND 

PROCESS HEATERS — 0.075 MMBTU/HR TO LESS THAN 2.0 MMBTU/HR) 

VERBAL COMMENTS, AUGUST 22, 2013 WORKSHOP 

EPA REGION IX STAFF COMMENTS 

No verbal comments were received from EPA. 

ARB STAFF COMMENTS 

No verbal comments were received from ARB. 

STAKEHOLDER COMMENTS 

R.F. MacDonald Company (MacDonald) 

Cargill Beef Packers (Cargill) 

1. COMMENT: There are some boilers and water heaters in the 0.075-2.0 million 

British thermal units per hour (MMBtu/hr) size range installed in the San Joaquin 

Valley (Valley) with a South Coast Air Quality Management District (SCAQMD) 

certification sticker for meeting a 30 parts per million by volume (ppmv) NOx 

emission limit; however, the current NOx emission limit for these units in Rule 4308 

is 20 ppmv. We are concerned the District’s Compliance department is not noticing 

these units because they have a SCAQMD certification sticker. (MacDonald) 

RESPONSE: The 20 ppmv NOx emission limit for most units subject to Rule 4308 

went into effect on January 1, 2011. Prior to that date, units supplied, sold, or 

installed in the Valley were required to meet either a 30 ppmv or 77 ppmv NOx 

emission limit. Since Rule 4308 is a point-of-sale rule and does not require 

replacement of existing units to meet rule limits, these units may have been 

purchased prior to the January 1, 2011 compliance date. 

2. COMMENT: Since the District is lowering the NOx emission limit for instantaneous 

units with a rated heat input of 0.075-0.4 MMBtu/hr from 55 ppmv to 20 ppmv, will a 

20 ppmv NOx emission limit also apply to instantaneous units with a rated heat input 

greater than 0.4 to less than 2.0 MMBtu/hr? (Cargill) 

RESPONSE: The current version of Rule 4308 already contains a 20 ppmv NOx 

emission limit for instantaneous units with a rated heat input greater than 0.4 to less 

than 2.0 MMBtu/hr. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix A: Comments and Responses November 14, 2013 

A - 5 Final Staff Report with Appendices for 

Amendments to Rule 4308 

WRITTEN COMMENTS, AUGUST 22, 2013 WORKSHOP 

EPA REGION IX STAFF COMMENTS 

The District did not receive a comment letter from EPA. 

ARB STAFF COMMENTS 

The District did not receive a comment letter from ARB. 

STAKEHOLDER COMMENTS 

One comment was received during the commenting period following the August 22nd 

public workshop from the Cleaning Equipment Trade Association (CETA). 

3. COMMENT: Pressure washers differ in application and design from the boilers, 

steam generators, and process heaters that Rule 4308 is intended to regulate. 

Pressure washers have limited use and most units are portable. As a result, CETA 

supports the draft amendment to Rule 4308 to include an exemption for pressure 

washers. 

RESPONSE: Comment noted. 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix A: Comments and Responses November 14, 2013 

A - 6 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 1 Final Staff Report with Appendices for 

Amendments to Rule 4308

APPENDIX B 

Emission Reduction Analysis 

For Amendments to Rule 4308 

November 14, 2013 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 2 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank. 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 3 Final Staff Report with Appendices for 

Amendments to Rule 4308 

EMISSION REDUCTION ANALYSIS FOR 

AMENDMENTS TO RULE 4308 

I. SUMMARY 

Rule amendments reduce NOx emissions by lowering the NOx emission limit from 55 

parts per million by volume (ppmv) to 20 ppmv for instantaneous water heaters with a 

rated heat input of 0.075-0.4 million British thermal units per hour (MMBtu/hr) 

(instantaneous units), as committed to in the 2012 PM2.5 Plan. Instantaneous units 

have an estimated lifetime of 20 years.1 Therefore, as a point-of-sale rule, emission 

reductions will occur over 20 years, from 2015 through 2034. 

The 2012 PM2.5 Plan did not specify an emission reduction commitment for this rule 

amendment project; therefore, there is no comparison between a plan emission 

reduction commitment and the emission reductions from these rule amendments. The 

estimated NOx emission reductions upon full rule implementation in 2034 are 

summarized in Table B-1. 

Table B-1: Emissions Reduced Upon Full Rule Implementation in 2034 

Number of Units 

in the Valley 

Baseline NOx 

Emissions Inventory 

(tons per year, or 

tpy) 

NOx Emission 

Reductions (tpy) 

Percent 

Reduction from 

Baseline 

1,678 2.92 1.82 62.3% 

II. BACKGROUND 

Rule 4308 applies to any person who supplies, sells, offer for sale, installs, or solicits 

the installation of boilers, steam generators, or process heaters with a rated heat input 

of 0.075 MMBtu/hr to less than 2.0 MMBtu/hr. The rule amendment will reduce NOx 

emissions by requiring instantaneous units to meet a 20 ppmv NOx emission limit 

compared to the current limit of 55 ppmv. These types of units in this size range are 

used primarily in a variety of commercial settings. 

Since this rule amendment is affecting a small subcategory of units subject to Rule 

4308, the baseline NOx emissions inventory for these instantaneous units is 

considerably smaller than the total NOx emissions inventory for the overall source 

category. Table B-2 illustrates the NOx emissions inventory for all units subject to Rule 

 

1

 United States Department of Energy [DOE]: Tankless or Demand-Type Water Heaters. (2012). Retrieved June 11, 

2013 from http://energy.gov/energysaver/articles/tankless-or-demand-type-water-heaters
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 4 Final Staff Report with Appendices for 

Amendments to Rule 4308 

4308. As demonstrated in this appendix, the 2034 baseline emissions inventory for 

instantaneous units affected by the rule amendments is 2.92 tpy. 

Table B-2: Annual Average NOx Emissions Inventory for All Units Subject to 

Rule 4308*

Year 2012 2014 2015 2016 2017 2018 2019

NOx 

Emissions 

(tpy) 

259.2 233.6 219.0 211.7 204.4 197.1 193.5 

*2012 PM2.5 Plan data converted to tpy. 

III. EMISSION REDUCTION ANALYSIS 

A. Assumptions for the Emission Reduction Analysis 

District staff gathered data from manufacturers, previous District staff reports, 

Department of Energy (DOE) data, and the 2006 South Coast Air Quality Management 

District (SCAQMD) Rule 1146.2 staff report to determine emission capacity factors, 

average usage rates, emission rates, and average unit size. 

The District sent out a survey to gather information on the number of units in this size 

category in 2009. Only 50% of surveys were returned, and most of them did not contain 

any information on the number of units for this size category. Therefore, the results of 

that survey are not included in this analysis. 

For purposes of this emission reduction analysis, the following assumptions are made: 

1. Population-to-Unit Ratio: District staff calculated an average population-to-unit 

ratio, using SCAQMD population data2 and an estimate for the total number of 

units with a rated heat input of 0.075-0.4 MMBtu/hr in the SCAQMD.3

 For every 

385 people, there is one unit in the size range of 0.075-0.4 MMBtu/hr.

2. Valley Population: A Valley population of 4,330,000 people is assumed for 

2015, based on data from Valley Metropolitan Planning Organizations (MPOs).4

 

2

 SCAQMD: About South Coast AQMD. (2012, October 9). Retrieved May 7, 2013 from 

http://www.aqmd.gov/aqmd/index.html 

3

 SCAQMD. (2006, May 5). Staff Report for Proposed Amended Rule 1146.2- Emissions of Oxides of Nitrogen from 

Large Water Heaters and Small Boilers and Process Heaters. Diamond Bar, CA. Retrieved from 

http://www.aqmd.gov/hb/2006/may/060535a.html

4

 The Planning Center. (2012, March 27). San Joaquin Valley Demographic Forecasts 2010 to 2050. 

http://www.valleyblueprint.org/files/San%20Joaquin%20Valley%20Demographic%20Forecasts%20-

%20Final%2027%20Mar%202012_0.pdf
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 5 Final Staff Report with Appendices for 

Amendments to Rule 4308 

3. % Instantaneous: The DOE estimates that 3% of water heaters sold are natural 

gas-fired tankless (instantaneous) units, 48% sold are natural gas-fired storage 

units, and the remaining 49% sold are electric units.5

 The District assumes that 

instantaneous units make up 5.9% of the natural gas-fired water heater inventory 

in 2015, which is the year that the 20 ppmv NOx emission limit will be 

implemented for instantaneous units. 

% of gas units that are instantaneous = (% of gas instantaneous) X 100 

(% of gas instantaneous + % of gas storage) 

 % of gas units that are instantaneous = (0.03) X 100 

 (0.03+0.48) 

 % of gas units that are instantaneous = 5.9% 

4. Growth Rate: An increasing number of new large residential and commercial 

developments are being built with instantaneous water heaters, due to the 

increased fuel and energy efficiency that these units provide over typical tankstyle water heaters. Similarly, some existing commercial businesses and 

residents are replacing tank-style units with instantaneous units because of the 

added efficiency benefits. Various sources estimate that in future years, 

instantaneous water heaters will have an annual growth rate of 4-10%.6,7 To 

remain conservative, the District will assume an annual 5% growth rate for the 

inventory of instantaneous units in the Valley. 

5. # of Years Projected Forward: The District is projecting forward the inventory

of instantaneous units in the Valley through 2034, the year of full rule 

implementation. Therefore, the District is projecting the inventory of 

instantaneous units forward 19 years. 

6. Capacity Factor: A 0.22 capacity factor will be used to calculate the baseline 

emissions from a 55 ppmv NOx emission limit and potential emissions from a 20 

ppmv NOx emission limit.8 The capacity factor represents the fraction of fuel 

 

5

 United States Department of Energy [DOE]. (2009). 2009 Water Heater Market Profile. 

http://www.energystar.gov/ia/partners/prod_development/new_specs/downloads/water_heaters/Water_Heater_Marke

t_Profile_Sept2009.pdf

6

 California Utilities Statewide Codes and Standards Team. (October 2011). 2013 California Building Energy 

Efficiency Standards. 

http://www.energy.ca.gov/title24/2013standards/prerulemaking/documents/current/Reports/Residential/Water_Heatin

g/2013_CASE_WH2.WH5_WaterHeaterReady-10.28.2011.pdf 

7

 CenterPoint Energy. (2009). Vertical Subdivision Workshop: Tankless Water Heaters. 

http://www.centerpointenergy.com/staticfiles/CNP/Common/SiteAssets/doc/Tankless%20Water%20HeatersRheem.pdf 

8

 SCAQMD. (2006, May 5). Staff Report for Proposed Amended Rule 1146.2- Emissions of Oxides of Nitrogen from 

Large Water Heaters and Small Boilers and Process Heaters. Diamond Bar, CA. Retrieved from 

http://www.aqmd.gov/hb/2006/may/060535a.html
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 6 Final Staff Report with Appendices for 

Amendments to Rule 4308 

actually burned or consumed by the unit in a year compared to the theoretical 

maximum amount of fuel that a unit could use in a year. 

7. Average Rating: An average rating is applied to the 0.075 MMBtu/hr and 0.4 

MMBtu/hr size categories since the number of instantaneous units is assumed to 

be distributed evenly within this size range. The average rating is 0.238 

MMBtu/hr. Based on the instantaneous water heaters listed in the SCAQMD List 

of Certified Units Pursuant to Rule 1146.2,

9

 the most commonly available 

instantaneous units have a rated heat input of 0.2 MMBtu/hr, further supporting 

the assumption. 

8. Baseline Emission Rate: The baseline emission rate assumes 100% of 

instantaneous units in 2034 comply with the current NOx emission limit and 

operate with a NOx emission rate of 55 ppmv (0.068 lb NOx/MMBtu). 

9. Amended Emission Rate: The amended emission rate assumes 100% of 

instantaneous units will comply with the amended NOx emission limit, upon full 

rule implementation in 2034, and operate with a NOx emission rate of 20 ppmv 

(0.024 lb NOx/MMBtu). 

10. Commercial Average Daily Use (ADUcommercial): Average usage is 1,000 

gallons/day (gal/day) for commercial and industrial water heaters.10

11. Residential Average Daily Use (ADUresidential): Average residential water 

heater usage is 27-135 gal/day. District staff averaged this range and assumes 

that average residential water heater usage is 81 gal/day.11

12. Average Water Output Rate: The average water output rate range for 

instantaneous water heaters is 2-5 gallons/minute (gal/min).12 District staff 

assumes the average water output rate is 3.5 gal/min. 

B. Total Number of Instantaneous Units in the Valley in 2034 

Using the population-to-unit ratio and percentage of units that are instantaneous, 

the District calculated the total number of instantaneous units in the Valley in 

2015 (first year of rule implementation). Using this figure and the annual growth 

 

9

 SCAQMD. (2013, July 9). List of Certified Units Pursuant to Rule 1146.2. Diamond Bar, CA. Retrieved from 

http://www.aqmd.gov/rules/doc/r1146/r1146_2table.pdf

10 United States Department of Energy [DOE]: Office FEMP Designated Product: Commercial Gas Water Heaters. 

(2012). Retrieved June 11, 2013 from 

http://www1.eere.energy.gov/femp/technologies/m/eep_com_gaswaterheaters.html#foot4 

11 Energy Center of Wisconsin. (2010). Energy Use by Residential Gas Water Heaters. Retrieved from 

http://www.ecw.org/ecwresults/254-1.pdf 

12 United States Department of Energy [DOE]: Tankless or Demand-Type Water Heaters. (2012). Retrieved June 11, 

2013 from http://energy.gov/energysaver/articles/tankless-or-demand-type-water-heaters
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 7 Final Staff Report with Appendices for 

Amendments to Rule 4308 

rate of instantaneous units, the District calculated the total number of units in the 

Valley in 2034. 

Units(in 2015) = (Population-to-Unit Ratio) x (Valley Population) x (% Instantaneous) 

Units(in 2015) = (1 unit/385 people) x (4,330,000 people) x (0.059) 

Units(in 2015) = 664 instantaneous units 

Total Units(in 2034) = [Units(in 2015)] x [(Growth Rate)^(# of Years Projected Forward)]

Total Units(in 2034) = (664) x [1.05^19] 

Total Units(in 2034) = 1,678 instantaneous units 

C. Average Daily Usage (ADU) 

Most of the instantaneous units of this size range are used for commercial 

purposes; however, to conduct a conservative analysis the District averaged the 

ADUresidential and ADUcommercial figures in order to calculate the ADU for all units. 

ADUgallons = (ADUresidential + ADUcommercial) / 2 

ADUgallons = (81 gal/day + 1,000 gal/day) / 2 

ADUgallons = 540.5 gal/day 

ADUhours= (ADUgallons) / (Average Water Output Rate x 60 min/hr) 

ADUhours = (540.5 gal/day) / (3.5 gal/min x 60 min/hr) 

ADUhours = 2.6 hours/day 

D. Baseline NOx Emissions Based on Current NOx Emission Limit of 55 ppmv 

(Emissions1) 

Emissions1 (tpd) = (Total Units) x (Average Rating) x (Baseline Emission Rate) x 

 (Capacity Factor) x (ADUhours) x (ton/lb) 

Emissions1 (tpd) = (1,678) x (0.238 MMBtu/hr) x (0.068 lb NOx/MMBtu) x (0.22) x 

 (2.6 hours/day) x (1 ton/2,000 lb) 

Emissions1 (tpd) = 0.008 tpd

Emissions1 (tpy) = (Emissions1 (tpd)) x (365 days/year) 

Emissions1 (tpy) = (0.008 tons/day) x (365 days/year) 

Emissions1 (tpy) = 2.92 tpy 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix B: Emission Reduction Analysis November 14, 2013 

B - 8 Final Staff Report with Appendices for 

Amendments to Rule 4308 

E. NOx Emissions Based on Amended NOx Emission Limit of 20 ppmv 

(Emissions2) 

Emissions2 (tpd) = (Total Units) x (Average Rating) x (Amended Emission Rate) x 

 (Capacity Factor) x (ADUhours) x (ton/lb) 

Emissions2 (tpd) = (1,678) x (0.238 MMBtu/hr) x (0.024 lb NOx/MMBtu) x (0.22) x 

 (2.6 hr/day) x (1 ton/2,000 lb) 

Emissions2 (tpd) = 0.003 tpd 

Emissions2 (tpy) = (Emissions2 (tpd)) x (365 days/year) 

Emissions2 (tpy) = (0.003 tons/day) x (365 days/year) 

Emissions2 (tpy) = 1.10 tpy

F. Total Emission Reductions (TER) 

TER = (Emissions1(tpy)) - (Emissions2(tpy)) 

TER = (2.92 tpy) - (1.10 tpy) 

TER = 1.82 tpy 

G. % of Baseline Emissions Reduced 

% of Baseline Emissions Reduced = [(TER) / (Baseline Emissions)] x 100 

% of Baseline Emissions Reduced = [(1.82 tpy) / (2.92 tpy)] x 100 

% of Baseline Emissions Reduced = 62.3% 

IV. CONCLUSION 

Since this is a point-of-sale rule, the NOx emission reductions from this rule amendment 

will occur gradually as instantaneous units are replaced with newer instantaneous units, 

new units are purchased for new developments, and as people switch from tank-style to 

instantaneous units between 2015 and 2034. The total NOx emission reductions of 

1.82 tpy will occur upon full rule implementation in 2034. Table B-3 illustrates the 

cumulative NOx emission reductions over this 20 year period. 

Table B-3: Cumulative NOx Emission Reductions from Amended Rule 430813

 

Year 2019 2024 2029 2034 

NOx Emission 

Reductions (tpy) 0.34 0.76 1.25 1.82 

 

13 District staff assumed that each year for 20 years 5% of the inventory of the existing instantaneous units in 2015 

will be replaced. To calculate the cumulative emission reductions for each year, the District added the emission 

reductions from the replacement of the existing instantaneous units to the emission reductions from the purchase of 

new instantaneous units for either new developments or people switching from tank-style to instantaneous units. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 1 Final Staff Report with Appendices for 

Amendments to Rule 4308 

APPENDIX C 

Cost Effectiveness Analysis 

For Amendments to Rule 4308 

November 14, 2013 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 2 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 3 Final Staff Report with Appendices for 

Amendments to Rule 4308 

COST EFFECTIVENESS ANALYSIS FOR 

AMENDMENTS TO RULE 4308 

I. SUMMARY 

Per California Health and Safety Code (CH&SC) Section 40920.6(a), the District 

conducts absolute and incremental cost effectiveness analyses of available emission 

control options to evaluate the economic reasonableness of a new rule or rule 

amendment prior to adoption. A cost effectiveness analysis examines the added cost 

(in dollars per year) of the control technology or technique, divided by the emission 

reductions achieved (in tons per year (tpy)). 

This rule amendment project will lower the NOx emission limit for natural gas-fired 

instantaneous water heaters with a rated heat input of 0.075-0.4 million British thermal 

units per hour (MMBtu/hr) (instantaneous units) from 55 parts per million by volume 

(ppmv) to 20 ppmv. As a point-of-sale rule, this rule amendment will mandate that any 

instantaneous units supplied, sold, or installed in the San Joaquin Valley (Valley) meet a 

20 ppmv NOx emission limit effective on and after January 1, 2015. 

Based on the analysis in this appendix, the absolute cost effectiveness is summarized 

in Table C-1. Incremental cost effectiveness is not applicable to this project. 

Table C-1: Cost Effectiveness Analysis Findings for Amended Rule 4308 

Number of 

Units Affected

Differential Cost for 

a 20 ppmv 

Compliant Unit 

(Low-End Estimate) 

Differential Cost for 

a 20 ppmv 

Compliant Unit 

(High-End Estimate) 

Absolute Cost 

Effectiveness 

1,678 $3.00 to $185.00 -$45.00 to $489.00 

$19,961 to 

$52,746/ton of NOx 

reductions 

II. ESTIMATED COMPLIANCE COSTS 

Estimated compliance costs for a rule project can include, but are not limited to, capital 

equipment costs, engineering design costs, additional labor or fuel costs, installation 

costs, and costs incurred from implementing new safety requirements. There are no 

additional engineering costs, labor costs, or costs from new safety requirements 

resulting from this rule amendment. Installation costs are not expected to vary for 20 

ppmv and 55 ppmv compliant units. Therefore, compliance costs for this rule 

Cost Effectiveness ($/ton) = Compliance Cost ($/year) 

Emission Reductions (ton/year) 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 4 Final Staff Report with Appendices for 

Amendments to Rule 4308 

amendment consist solely of the price differential between 20 ppmv and 55 ppmv 

compliant instantaneous units. 

South Coast Air Quality Management District (SCAQMD) currently maintains a list of 

natural gas-fired water heaters certified to meet SCAQMD Rule 1146.2 emission limits.1 

This list is organized by the respective manufacturer, the size of the models, and the 

NOx emission limit achievable by that model (either 20 or 55 ppmv). The following six 

water heater manufacturers produce instantaneous units: 

1. Bosch 

2. Navien America, Inc. 

3. Noritz America Corp. 

4. Paloma Industries, Inc. 

5. Rinnai 

6. Takagi Industrial Co. USA, Inc. 

All six manufacturers confirmed that they sell their units to Valley suppliers, wholesalers, 

and/or contractors for distribution to Valley businesses and residents. Five of the 

manufacturers produce both 20 ppmv and 55 ppmv compliant instantaneous units, while 

Navien America only produces 20 ppmv compliant units due to the rules in place in the 

SCAQMD and Bay Area Air Quality Management District. Many of the manufacturers 

that still produce 55 ppmv compliant units have discontinued several of their 55 ppmv 

models and replaced them with instantaneous units capable of meeting a NOx emission 

limit of 20 ppmv. 

Using the model numbers provided in the SCAQMD list of certified units, District staff 

conducted research and collected data on the prices of the various 20 ppmv and 55 

ppmv compliant units through a variety of water heater retailers, suppliers, and 

wholesalers; this list is available in Section VI (References). 

Cost data for luxury units, such as condensing gas combination boilers, is not included 

in this cost effectiveness analysis. Condensing gas combination boilers are water 

heaters in which a high efficiency (typically greater than 90%) is achieved by using the 

waste heat to preheat the cold water entering the boiler. These units are generally 

three to five times more expensive than a typical instantaneous unit and are not 

representative of the price range for the majority of instantaneous units. 

Most of the instantaneous units sold in the 0.075-0.4 MMBtu/hr size range have a rated 

heat input capacity of 0.12-0.2 MMBtu/hr. In addition, the majority of cost data available 

is for instantaneous units with a rated heat input capacity of 0.12-0.2 MMBtu/hr. Table 

C-2 summarizes cost information for instantaneous units in two size categories: 0.12-

0.16 MMBtu/hr and 0.161-0.20 MMBtu/hr. The table includes low-end and high-end 

 

1

 South Coast Air Quality Management District [SCAQMD]. (2013, July 9). List of Certified Units Pursuant to Rule 

1146.2. Diamond Bar, CA. Retrieved from http://www.aqmd.gov/rules/doc/r1146/r1146_2table.pdf
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 5 Final Staff Report with Appendices for 

Amendments to Rule 4308 

cost estimates of 20 ppmv and 55 ppmv compliant units, as well as the price differential 

between 20 ppmv and 55 ppmv compliant units. 

Table C-2: Compliance Costs for 55 ppmv Compliant Units vs. 

20 ppmv Compliant Units 

Unit Size 

(MMBtu/hr)

20 ppmv 

Compliant 

Unit Cost

55 ppmv 

Compliant 

Unit Cost

Price Differential 

Between 

20 ppmv and 55 

ppmv Compliant 

Units

Low-End Estimates

0.12 to 0.16 $549.00 $546.00 $3.00

0.161 to 0.20 $744.00 $559.00 $185.00

High-End Estimates

0.12 to 0.16 $1,554.00 $1,065.00 $489.00 

0.161 to 0.20 $2,234.00 $2,279.00 -$45.00 

III. ABSOLUTE COST EFFECTIVENESS ANALYSIS 

Absolute cost effectiveness of a control option is the additional annual compliance cost, 

in dollars per year, to meet the amended rule’s requirements divided by the emission 

reductions achieved in tons of pollutant reduced per year. This absolute cost 

effectiveness analysis examines the differential cost of a 20 ppmv compliant 

instantaneous unit and a 55 ppmv compliant instantaneous unit and the emission 

reductions anticipated from lowering the NOx emission limit to 20 ppmv for these units. 

A. Assumptions and Formulas 

The following assumptions and formulas were used for calculating the absolute cost 

effectiveness of lowering the NOx emission limit for instantaneous units to 20 ppmv: 

1. Price Differential: A $185 price differential (highest price differential for the lowend cost estimates) and $489 price differential (highest price differential for the 

high-end cost estimates) are used for these calculations in order to conduct a 

conservative absolute cost effectiveness analysis (see Table C-2). 

2. Annualized Compliance Cost (ACC) Formula: 

ACC = Price Differential x Capital Recovery Factor (CRF) 

The CRF converts the price differential into equal annual payments over a 

specified time, at a specified interest rate. The “equipment life” variable in the 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 6 Final Staff Report with Appendices for 

Amendments to Rule 4308 

CRF equation is 20 years because this is the estimated lifetime of an 

instantaneous unit.2

CRF = 

1( ) 1

1( )

+ −

+

n

n

i

i i

 = 

1( )1.0 1

1(1.0 )1.0

20

20

+ −

+

 = 0.117 

Where: 

 i = Interest rate (10%) 

n = Equipment life (20 years) 

3. Total Number of Units: Based on information from Appendix B (Emission 

Reduction Analysis), there are 1,678 instantaneous units in the Valley that will be 

affected by these rule amendments upon full rule implementation in 2034. 

4. Total Annualized Cost (TAC) Formula: 

TAC = (ACC) x (Total Number of Units) 

5. Total Emission Reductions: Based on the analysis in Appendix B (Emission 

Reduction Analysis), this rule amendment will result in a total of 1.82 tpy of NOx 

emission reductions from instantaneous units. 

6. Absolute Cost Effectiveness (ACE) Formula: 

ACE = (TAC) / (Total Emission Reductions) 

B. Annualized Compliance Cost 

ACC = Price Differential x CRF 

ACC(low-end estimate) = ($185) x (0.117) 

ACC(low-end estimate) = $21.65 per unit 

ACC(high-end estimate) = ($489) x (0.117) 

ACC(high-end estimate) = $57.21 per unit 

C. Total Annualized Cost (TAC) 

TAC = (ACC) x (Total Number of Units) 

TAC(low-end estimate) = ($21.65) x (1,678) 

TAC(low-end estimate) = $36,329 

 

2

 Department of Energy [DOE]: Tankless or Demand-Type Water Heaters. (2012). Retrieved June 11, 2013 from 

http://energy.gov/energysaver/articles/tankless-or-demand-type-water-heaters
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 7 Final Staff Report with Appendices for 

Amendments to Rule 4308 

TAC(high-end estimate) = ($57.21) x (1,678) 

TAC(high-end estimate) = $95,998 

D. Absolute Cost Effectiveness (ACE) 

ACE = (TAC) / (Total Emission Reductions) 

ACE(low-end estimate) = ($36,329/year) / (1.82 tpy of NOx) 

ACE(low-end estimate) = $19,961/ton of NOx reduced 

 ACE(high-end estimate) = ($95,998/year) / (1.82 tpy of NOx) 

ACE(high-end estimate) = $52,746/ton of NOx reduced 

IV. INCREMENTAL COST EFFECTIVENESS 

The incremental cost effectiveness is the difference in cost between two successively 

more effective controls, divided by the additional emission reductions achieved. For this 

rule-amending project, the amended NOx emission limit is considered the lowest 

achievable NOx emission limit in practice. An incremental cost effectiveness analysis is 

not applicable to this project. 

V. CONCLUSION 

The additional cost for a 20 ppmv compliant instantaneous unit is $3.00 to $185.00 for 

the low-end cost estimates and -$45.00 to $489.00 for the high-end cost estimates. 

This differential cost is distributed over the 20 year lifetime of the unit, which reduces 

the financial impact for stakeholders. The absolute cost effectiveness ranges from 

$19,961 per ton of NOx emissions reduced (low-end cost estimate) to $52,746 per ton 

of NOx emissions reduced (high-end cost estimate). Lowering the NOx emission limit to 

20 ppmv for instantaneous units is a cost effective and economically reasonable rule 

amendment. 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 8 Final Staff Report with Appendices for 

Amendments to Rule 4308 

VI. REFERENCES 

AC Wholesalers. (2013). Retrieved June 25, 2013, https://www.acwholesalers.com/

Appliances Connection. (2013). Retrieved June 27, 2013, 

http://www.appliancesconnection.com/

aTanklessLife.com. (2013). Retrieved August 6, 2013, http://www.atanklesslife.com/ 

Bonanza. (2013). Retrieved June 17, 2013, http://www.bonanza.com/

Build.com. (2013). Retrieved June 17, 2013, http://www.build.com/

BuyPlumbing.net. (2013). Retrieved June 17, 2013, http://www.buyplumbing.net/

ComfortGurus.com. (2013). Retrieved August 6, 2013, http://www.comfortgurus.com/

EcoDirect. (2013). Retrieved August 6, 2013, http://www.ecodirect.com/ 

eComfort.com. (2013). Retrieved June 27, 2013, http://ecomfort.com/

eCrater. (2013). Retrieved August 6, 2013, http://www.ecrater.com/ 

Food Service Warehouse (FSW). (2013). Retrieved June 25, 2013, 

http://www.foodservicewarehouse.com/

Global Equipment Company. (2013). Retrieved August 6, 2013, 

http://www.globalindustrial.com/ 

Heater-Store. (2013). Retrieved August 6, 2013, http://www.heater-store.com/

Home Center. (2013). Retrieved June 17, 2013, http://www.homecenter.com/

Homeclick. (2013). Retrieved June 25, 2013, http://www.homeclick.com/

Home Perfect. (2013). Retrieved June 10, 2013, http://www.homeperfect.com/

Home Plumbing. (2013). Retrieved June 25, 2013, http://www.homeplumbing.com/

Hotel Restaurant Supply. (2013). Retrieved June 26, 2013, 

http://www.hotelrestaurantsupply.com/ 

Low Energy Systems. (2013). Retrieved August 5, 2013, 

http://www.tanklesswaterheaters.com/
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 9 Final Staff Report with Appendices for 

Amendments to Rule 4308 

Menard. (2013). Retrieved August 6, 2013, http://www.menards.com/main/home.html 

Newegg.com. (2013). Retrieved August 6, 2013, http://www.newegg.com/

Paloma Tankless Water Heaters. (2013). Retrieved August 6, 2013, 

http://www.palomastore.com/ 

PexSupply.com. (2013). Retrieved June 10, 2013, http://www.pexsupply.com/

PlumbersCrib.com. (2013). Retrieved August 6, 2013, http://www.plumberscrib.com/

PlumbersStock.com. (2013). Retrieved June 25, 2013, https://www.plumbersstock.com/ 

PlumberSurplus.com. (2013). Retrieved August 6, 2013, 

http://www.plumbersurplus.com/

Pro Water Heater Supply. (2013). Retrieved June 20, 2013, 

http://www.prowaterheatersupply.com/ 

Rakuten. (2013). Retrieved August 6, 2013, https://global.rakuten.com/en/

Remodelr.com. (2013). Retrieved June 20, 2013, http://www.remodelr.com/

Shop Designer Plumbing. (2013). Retrieved August 5, 2013, 

http://shop.designerplumbing.com/ 

Tankless Guys. (2013). Retrieved June 17, 2013, http://www.tanklessguys.com/

Tankless King. (2013). Retrieved August 6, 2013, http://www.tanklessking.com/

The Energy Conscious . (2013). Retrieved June 26, 2013, 

http://www.theenergyconscious.com/ 

The Faucet Depot. (2013). Retrieved June 27, 2013, http://www.faucetdepot.com/ 

The Home Depot. (2013). Retrieved August 6, 2013, http://www.homedepot.com/ 

VentingDirect.com. (2013). Retrieved June 17, 2013, http://www.ventingdirect.com/ 

Wayfair.com. (2013). Retrieved June 10, 2013, http://www.wayfair.com/

Westside Wholesale. (2013). Retrieved August 5, 2013, 

http://www.westsidewholesale.com/ 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix C: Cost Effectiveness Analysis November 14, 2013 

 

C - 10 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

D - 1 Final Staff Report with Appendices for 

Amendments to Rule 4308 

APPENDIX D 

Socioeconomic Analysis 

For Amendments to Rule 4308 

November 14, 2013 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 2 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 3 Final Staff Report with Appendices for 

Amendments to Rule 4308 

SOCIOECONOMIC ANALYSIS FOR AMENDMENTS TO RULE 4308 

I. INTRODUCTION 

Pursuant to California Health and Safety Code (CH&SC) Section 40728.5 as well as the 

District’s 2011 Economic Analysis Process Recommendations,

1

 the District conducts a 

socioeconomic analysis of a proposed rule or rule amendment that will significantly 

affect air quality or emission limitations prior to rule adoption. A socioeconomic analysis 

examines how a rule project may impact industries, businesses, employment rates, and 

the economy in the San Joaquin Valley (Valley). 

This rule amendment project will achieve emission reductions by lowering the NOx 

emission limit for natural gas-fired instantaneous water heaters with a rated heat input 

of 0.075-0.4 million British thermal units per hour (MMBtu/hr) (instantaneous units) from 

55 parts per million by volume (ppmv) to 20 ppmv. As a point-of-sale rule, this rule 

amendment will mandate that any instantaneous units supplied, sold, or installed in the 

Valley meet a 20 ppmv NOx emission limit effective on and after January 1, 2015. 

The CH&SC requires discussion of the necessity of adopting, amending, or repealing a 

rule to attain state and federal ambient air quality standards; this requirement is met 

through the discussion in the body of the Final Staff Report. The other five CH&SC 

requirements for a socioeconomic analysis are satisfied through this appendix, which 

examines the following items: 

• Type of industries or businesses affected by the rule amendments (Section II 

of this appendix) 

• Range of probable costs for the rule amendments (Section IV of this 

appendix) 

• Emission reduction potential of the rule amendments (Section IV of this 

appendix) 

• Availability and cost effectiveness of alternatives to the rule amendments 

(Section V of this appendix) 

• How the rule amendments impact the Valley’s employment and economy 

(Section VI of this appendix) 

The District also evaluated two additional items in this socioeconomic analysis, per the 

District’s 2011 Economic Analysis Process Recommendations: 

• Costs and socioeconomic impacts from previous versions of the rule (Section 

III of this appendix) 

 

1

 San Joaquin Valley Air Pollution Control District [SJVAPCD]. (2011, October 20). Enhancements to District 

Economic Analysis of Regulations. Fresno, CA. Retrieved from 

http://www.valleyair.org/Board_meetings/GB/agenda_minutes/Agenda/2011/October/GB_Agenda_Item_13_Oct_20_

2011.pdf 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 4 Final Staff Report with Appendices for 

Amendments to Rule 4308 

• Impacts of rule amendments to small businesses, municipalities, and at-risk 

communities (Section VII of this appendix) 

II. AFFECTED INDUSTRIES AND BUSINESSES 

Instantaneous units are utilized in a variety of settings, including, but not limited to, the 

following areas: 

• Apartment buildings 

• Large homes 

• Small businesses 

• Commercial/office buildings 

• Small manufacturing facilities 

• Government facilities 

• Hotels 

• Restaurants 

• Hospitals 

• Educational institutions 

• Religious organizations 

End-users of instantaneous units are affected by the rule amendments, as they will not 

be allowed to purchase 55 ppmv compliant instantaneous units and could potentially 

pay more for a 20 ppmv compliant instantaneous unit. The incremental cost for 

purchasing a 20 ppmv compliant unit instead of a 55 ppmv compliant unit is minimal or 

nonexistent for certain instantaneous water heaters brands. 

Manufacturers of instantaneous units will be affected by the rule amendments, but there 

are currently no instantaneous water heater manufacturers in the Valley. There are 

Valley wholesalers, suppliers, and contractors who purchase instantaneous units from 

manufacturers to sell in the Valley that will be affected by the rule amendments. These 

businesses will no longer be allowed to sell, distribute, or install instantaneous units 

meeting a NOx emission limit of 55 ppmv. 

III. COSTS AND SOCIOECONOMIC IMPACTS FROM PREVIOUS VERSIONS OF 

RULE 4308 

Rule 4308 was adopted in October 2005 and subsequently amended in December 

2009. These 2013 amendments represent the third generation of this rule. In order to 

account for the cumulative impact of multiple generations of rules on this source 

category, the 2011 Economic Analysis Process Recommendations advises that staff 

reports include descriptions and cost estimates for previous generations of air pollution 

controls and reference previous socioeconomic analyses as each rule is amended. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 5 Final Staff Report with Appendices for 

Amendments to Rule 4308 

Previous staff reports for Rule 4308 did not specifically address cost estimates for 

instantaneous units; as such, there is no previous cost data to compare to the cost 

estimates for this final staff report. Previous socioeconomic analyses concluded that 

there were no significant economic or employment impacts associated with the adoption 

or amendment of Rule 4308 since it is a point-of-sale rule and does not require forced 

replacement of units. 

IV. COSTS AND EMISSION REDUCTION POTENTIAL FROM AMENDED RULE 

4308 

Compliance costs for this rule amendment consist of the price differential between 20 

ppmv and 55 ppmv compliant instantaneous units. There are no additional engineering 

costs, labor costs, or costs from new safety requirements resulting from this rule 

amendment. Installation costs are not expected to vary for 20 ppmv and 55 ppmv 

compliant units. Table D-1 below presents the compliance costs for 55 ppmv compliant 

instantaneous units versus 20 ppmv compliant instantaneous units, as examined in 

Appendix C (Cost Effectiveness Analysis). 

Table D-1: Compliance Costs for 55 ppmv Compliant Units vs. 

20 ppmv Compliant Units 

Unit Size 

(MMBtu/hr)

20 ppmv 

Compliant 

Unit Cost

55 ppmv 

Compliant 

Unit Cost

Price Differential 

Between 

20 ppmv and 55 

ppmv Compliant 

Units

Low-End Estimates

0.12 to 0.16 $549.00 $546.00 $3.00

0.161 to 0.20 $744.00 $559.00 $185.00

High-End Estimates

0.12 to 0.16 $1,554.00 $1,065.00 $489.00 

0.161 to 0.20 $2,234.00 $2,279.00 -$45.00 

The price differentials listed in Table D-1 will be distributed over the 20 year lifetime of 

the unit.2

 Assuming the most conservative price differential for the low-end estimates 

($185) and high-end estimates ($489), the average annual cost of a 20 ppmv compliant 

instantaneous unit will be $21.65-$57.21 per year (see Appendix C, Cost Effectiveness 

Analysis). 

As discussed in Appendix B (Emission Reduction Analysis), the amendments to Rule 

4308 are expected to result in 1.82 tons per year (tpy) of NOx emission reductions upon 

 

2

 Department of Energy [DOE]: Tankless or Demand-Type Water Heaters. (2012). Retrieved June 11, 2013 from 

http://energy.gov/energysaver/articles/tankless-or-demand-type-water-heaters
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 6 Final Staff Report with Appendices for 

Amendments to Rule 4308 

full rule implementation. Given the 20 year lifetime of instantaneous units, emission 

reductions will occur over a 20 year period (2015 through 2034) as existing 

instantaneous units are replaced with newer instantaneous units, new instantaneous 

units are purchased for new developments, and some end-users switch from tank-style 

to instantaneous units. These emission reductions represent a 62.3% reduction from 

the estimated baseline of 2.92 tpy of NOx emissions from instantaneous units. 

V. ALTERNATIVES TO RULE AMENDMENT 

Given the extent of the Valley’s attainment challenges, the District evaluates all potential 

opportunities to reduce emissions during the attainment planning process, and commits 

to pursue all reasonable emission reduction opportunities identified during this planning 

process. This amendment to Rule 4308 was identified as a reasonable opportunity to 

reduce emissions during the development of the 2012 PM2.5 Plan and there is no 

alternative to pursuing these emission reductions. 

The amended NOx emission limit is considered the lowest achievable NOx emission 

limit in practice. Although the District confirmed that the NOx emission limit is 

achievable and has been put into practice in other air districts, the rule does not specify 

how manufacturers are to achieve this limit. As such, there are no technological 

alternatives to compare for this rule amendment, so evaluation of the cost effectiveness 

of alternatives is not applicable to this rule project. 

VI. SOCIOECONOMIC IMPACTS 

A socioeconomic impact is any effect on the Valley’s employment or economy due to a 

regulatory action. There are no socioeconomic impacts anticipated for these rule 

amendments because there are no significant impacts to the following three groups that 

could potentially be affected by this rule-amending project: 

• The end-users of instantaneous units; 

• Manufacturers of instantaneous units; and 

• Wholesalers, suppliers, and/or contractors who supply or install instantaneous 

units. 

End-Users 

Rule 4308 does not require end-users to replace existing instantaneous units within a 

certain time frame; rather, as instantaneous units meeting the 55 ppmv NOx emission 

limit reach the end of their life and the users replace them, they will purchase a unit that 

meets a 20 ppmv NOx emission limit, thus ensuring that end-users are not forced to 

incur additional costs when their current units are still operable. Also, the price 

differential between 20 ppmv and 55 ppmv compliant units is minimal in terms of the 

overall cost of the unit, and some 20 ppmv compliant units are identical in price to their 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 7 Final Staff Report with Appendices for 

Amendments to Rule 4308 

55 ppmv counterparts. The price range for instantaneous units is more closely related 

to the fuel efficiency, energy efficiency, or luxury features (such as stainless steel build 

and touch screen capabilities) of an instantaneous unit, rather than the low-NOx 

capability of the unit. 

The District anticipates that owners of tank-style water heaters will continue the trend of 

replacing their current water heaters with instantaneous (tankless) water heaters 

because of the increased fuel, water, and energy efficiencies of instantaneous units 

(see Section II of the Final Staff Report). For those owners switching from tank-style to 

instantaneous units, any potential price differential between a 55 ppmv compliant 

instantaneous unit and a 20 ppmv compliant instantaneous unit will be largely offset by 

fuel and energy savings. 

Manufacturers 

There are six instantaneous water heater manufacturers identified by the South Coast 

Air Quality Management District (SCAQMD) in their List of Certified Units Pursuant to 

Rule 1146.2 (see Appendix C of this Final Staff Report). These manufacturers build 

instantaneous units and sell them to wholesalers, suppliers, or contractors for 

distribution to the end-users. 

As a result of these rule amendments, manufacturers will no longer be able to sell 55 

ppmv compliant instantaneous units to Valley retailers or contractors. However, all of 

the manufacturers identified who produce 55 ppmv compliant instantaneous units also 

produce the 20 ppmv compliant units. Five of the six manufacturers produce 55 ppmv 

and 20 ppmv compliant instantaneous units, while one of the manufacturers no longer 

produces 55 ppmv compliant units and now only produces 20 ppmv compliant 

instantaneous units. These rule amendments will have a minimal impact to 

instantaneous unit manufacturers. 

District staff also verified that none of the six instantaneous water heater manufacturers 

have manufacturing facilities located in the Valley. 

Wholesalers, Suppliers, and/or Contractors 

Wholesalers, suppliers, and contractors are the medium between the manufacturing 

facilities and the end-users, as these parties purchase units from the manufacturers to 

sell and distribute to users. These businesses will no longer be allowed to sell, 

distribute, or install instantaneous units meeting a NOx emission limit of 55 ppmv. The 

January 1, 2015 compliance deadline in the amended rule provides these wholesalers 

and suppliers with over 12 months to sell through existing stock before the new 

emission limit becomes effective. The availability and number of instantaneous units 

meeting a NOx emission limit of 20 ppmv has grown substantially within the last few 

years. Each of the six instantaneous water heater manufacturers are already producing 

several models in various sizes within the 0.075-0.4 MMBtu/hr rated heat input size 

range that meet a 20 ppmv NOx emission limit and are currently selling these units in 

the Valley. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix D: Socioeconomic Analysis November 14, 2013 

 

D - 8 Final Staff Report with Appendices for 

Amendments to Rule 4308 

Also, as discussed in Appendix C (Cost Effectiveness Analysis), the price differential 

between a 55 ppmv and 20 ppmv compliant instantaneous unit is minimal, ranging from 

$3.00 to $185.00 for the low-end cost estimates to a cost savings of $45.00 to an 

increased cost of $489.00 for the high-end cost estimates. Contractors, suppliers, and 

wholesalers sales volumes will not be adversely impacted. Profit margins will remain 

the same as the cost will be passed onto the consumer. 

VII. IMPACTS TO SMALL BUSINESSES, MUNICIPALITIES, AND AT-RISK 

COMMUNITIES 

Per the 2011 Economic Analysis Process Recommendations document, District staff is 

advised to evaluate how new rules or rule amendments may impact small businesses, 

municipalities, and at-risk communities where the major employer may respond to 

additional compliance costs by laying off workers. As discussed in Section VI above, 

these rule amendments are not expected to result in any significant economic impacts, 

nor any decreased employment for small businesses and industries in the Valley. As 

such, municipalities and at-risk communities are not expected to incur any economic or 

employment effects from these rule amendments. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix E: Rule Consistency Analysis November 14, 2013

E - 1 Final Staff Report with Appendices for 

Amendments to Rule 4308 

APPENDIX E 

Rule Consistency Analysis 

For Amendments to Rule 4308

November 14, 2013 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix E: Rule Consistency Analysis November 14, 2013

E - 2 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank.

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix E: Rule Consistency Analysis November 14, 2013

E - 3 Final Staff Report with Appendices for 

Amendments to Rule 4308 

RULE CONSISTENCY ANALYSIS FOR AMENDMENTS TO RULE 4308 

I. REQUIREMENTS FOR RULE CONSISTENCY ANALYSIS 

Pursuant to Section 40727.2 of the California Health and Safety Code, prior to adopting, 

amending, or repealing a rule or regulation, the District performs a written analysis that 

identifies and compares the air pollution control elements of the rule or regulation with 

corresponding elements of existing or proposed District and United States 

Environmental Protection Agency (EPA) rules, regulations, and guidelines that apply to 

the same source category. The rule elements analyzed are emission limits; monitoring 

and testing requirements; recordkeeping and reporting requirements; and operating 

parameters and work practice requirements. 

II. ANALYSIS 

A. District Rules 

There is no other District prohibitory rule or regulation tailored specifically for boilers, 

steam generators, and process heaters with a rated heat input of 0.075 million British 

thermal units per hour (MMBtu/hr) to less than 2.0 MMBtu/hr. Sources would be subject 

to District Rule 1081 (Source Sampling). The requirements of Rule 1081 are not in 

conflict with, nor are they inconsistent with the requirements of the amendments to Rule 

4308. 

B. Federal Rules, Regulations, and Policies 

1. EPA Alternative Control Techniques (ACT) Document 

EPA 453/R-94-022 (“ACT Document – NOx Emissions from Industrial/ 

Commercial/Institutional Boilers,” dated March 1994)

1

 discusses the different 

control techniques for controlling NOx emissions from boilers with heat input 

capacities from 0.4 to 1,500 MMBtu/hr. The ACT also presents the achievable 

emission levels of several control techniques based on the type of boiler and the 

type of fuel used and contains cost effectiveness estimates for the control 

techniques; however, the ACT does not recommend specific emission limits. As 

confirmed by the July 2010 EPA technical support document (TSD) for the 

approval of Rule 4308, the District rule is already as stringent as the ACT. 

 

1

 Environmental Protection Agency [EPA]: SIP Planning Information Toolkit: Control Techniques Guidelines and 

Alternative Control Techniques Documents. (2012). Retrieved April 10, 2013 from 

http://www.epa.gov/glo/SIPToolkit/ctgs.html
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix E: Rule Consistency Analysis November 14, 2013

E - 4 Final Staff Report with Appendices for 

Amendments to Rule 4308 

2. EPA Control Techniques Guideline (CTG) Document 

Based on the EPA CTG list2, there is no CTG for boilers, steam generators, and 

process heaters with a rated heat input capacity greater than or equal to 0.075 

MMBtu/hr to less than 2.0 MMBtu/hr. 

3. EPA New Source Performance Standard (NSPS) 

Based on the NSPS list in 40 CFR 603

, there is no NSPS for boilers, steam 

generators, and process heaters of this size. 

4. National Emission Standard for Hazardous Air Pollutants (NESHAP) and 

Maximum Achievable Control Technology (MACT) 

Based on the NESHAP and MACT lists in 40 CFR 61 (NESHAP)4

 and 40 CFR 63 

(MACT)5, there is no NESHAP or MACT for boilers, steam generators, and 

process heaters of this size. 

5. EPA Best Available Control Technology (BACT) Requirements 

There are no BACT requirements listed for boilers, steam generators, and 

process heaters of this size range. BACT requirements are applicable to units 

greater than 5.0 MMBtu/hr. 

6. EPA Policy on Recordkeeping 

EPA has a policy that mandates stationary sources keep and maintain records 

for at least five years; however, as a point-of-sale rule, boilers, steam, 

generators, and process heaters 0.075 to less than 2.0 MMBtu/hr are not 

permitted sources and are thus not required to follow specific recordkeeping 

guidelines. Units subject to Rule 4308 are not subject to EPA’s Policy on 

Recordkeeping. 

 

2

 Environmental Protection Agency [EPA]: SIP Planning Information Toolkit: Control Techniques Guidelines and 

Alternative Control Techniques Documents. (2012). Retrieved April 10, 2013 from 

http://www.epa.gov/glo/SIPToolkit/ctgs.html 

3

 Environmental Protection Agency [EPA]: 40 CFR 60-Standards of Performance for New Stationary Sources 

(NSPS). (2013). Retrieved April 10, 2013 from http://www.tceq.state.tx.us/permitting/air/rules/federal/60/60hmpg.html 

4

 Environmental Protection Agency [EPA]: 40 CFR 61-National Emission Standards for Hazardous Air Pollutants 

(NESHAPS). (2012). Retrieved April 10, 2013 from 

http://www.tceq.state.tx.us/permitting/air/rules/federal/61/61hmpg.html 

5

 Environmental Protection Agency [EPA]: 40 CFR 63-National Emission Standards for Hazardous Air Pollutants for 

Source Categories (a.k.a. Maximum Achievable Control Technology (MACT)). (2013). Retrieved April 10, 2013 from 

http://www.tceq.state.tx.us/permitting/air/rules/federal/63/63hmpg.html
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix E: Rule Consistency Analysis November 14, 2013

E - 5 Final Staff Report with Appendices for 

Amendments to Rule 4308 

III. CONCLUSION 

Based on the above analysis, District staff found that the amendments to Rule 4308 do 

not conflict with any District or federal rules, regulations, or policies covering similar 

stationary sources. 

 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 

Appendix E: Rule Consistency Analysis November 14, 2013

E - 6 Final Staff Report with Appendices for 

Amendments to Rule 4308 

This page intentionally blank.