GOVERNING BOARD

Skip Barwick, Chair

Councilmember , City of Tulare

Hub Walsh, Vice Chair Supervisor, Merced County

Oliver L. Baines III Councilmember, City of Fresno

Tony Barba Supervisor, Kings County

Sally J. Bomprezzi Councilmember, City of Madera

Dennis Brazil Mayor, City of Gustine

Judith G. Case Supervisor, Fresno County

David Couch Supervisor, Kern County

Bob Elliott Supervisor, San Joaquin County

Harold Hanson Councilmember, City of Bakersfield

William O’Brien Supervisor, Stanislaus County

Alexander C. Sherriffs, M.D. Appointed by Governor

Tom Wheeler Supervisor, Madera County

J. Steven Worthley Supervisor, Tulare County

Seyed Sadredin

Executive Director
Air Pollution Control Officer

Northern Region Office 4800 Enterprise Way Modesto, CA 95356

- 8718 (209) 557

- 6400 • FAX (209) 557

- 6475

Central Region Office 1990 East Gettysburg Avenue Fresno, CA 93726

- 0244 (559) 230

- 6000 • FAX (559) 230

- 6061

Southern Region Office 34946 Flyover Court Bakersfield, CA 93308

- 9725 (661) 392

- 5500 • FAX (661) 392

- 5585

www.valleyair.org DATE: November 14, 2013

TO: SJV UAP CD G overning B oard

FROM: Seyed Sadredin, Executive Director/APCO

Project Coordinator: Jessi Fierro /Errol Villegas

RE: ITEM NUMBER 8: ADOPT PROPOSED

AMENDMENTS TO RULE 4308 (BOILERS, STEAM GENERATORS, AND PROCESS HEATERS

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

RECOMMENDATION S :

1. Adopt Proposed Amendments to Rule 4308 (Boilers, Steam Generators, and Process Heaters

— 0.075 MMBtu/hr to less than

2.0 MMB tu /hr).

2. Authorize the Chair to sign the attached Resolution.

BACKGROUND :

Rule 4308 reduces oxides of nitrogen (NOx) 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) through point

- of

- sale requirements

. In the District’s 2012 PM2.5 Plan, the District identified an opportunity to further reduce emissions from this category by lowering the emission limit for natural

gas

- fired instantaneous water heaters (also known as tankless water heaters) with a rated heat input of 0.075

- 0.4 MMBtu/hr

. P roposed

rule amendment s would lower the NOx emission limit for instantaneous units from 55 parts per million by volume (ppmv) to 20 ppmv, effective

on and after January 1, 2015

. The 2015 effective date would provide retailers with sufficient time to sell their remaining 55 ppmv compliant

units

. This proposed amendment would satisfy the commitment

included in the 2012 PM2.5 Plan to make the amendments by 2013.

In addition to amending the NOx emission limit for instantaneous units, the District is proposing several administrative amendments to Rule 4308 to clarify rule applicability and to remove outdated and redundant language.SJV

U APCD Governing Board ITEM NUMBER 8: ADOPT PROPOSED AMENDMENTS TO RULE 4308 (BOIL ERS, STEAM GENERATORS, AND PROCESS HEATERS

— 0.075 MMBTU/HR TO LESS THAN 2.0 MMBTU/HR)
November 14, 2013

2 DISCUSSION :

Rule 4308 was last amended on December 17, 2009 to inc orporate a 20 ppmv NOx

emission limit for most categories of natural gas

- fired water heaters, with the exception of instantaneous water heaters and pool heaters with a rated heat input of 0.075

- 0.4 MMBtu/hr. At that time, 20 ppmv compliant instantaneous water heaters and pool heaters of this size range were not yet feasible

. While pool heater technology is still only able to meet a NOx emission limit of 55 ppmv, 20 ppmv compliant instantaneous

unit s are now readily available in the 0.075

- 0.4 MMBtu/hr size range

.

The following is a summary of the proposed amendments to Rule 4308 and the results of the analyses supporting the proposed amendments.

Summary of Proposed Amendments to Rule 4308

The District is prop osing to lower the NOx emission limit for instantaneous units from 55 ppmv to 20 ppmv. South Coast Air Quality Management District (SCAQMD) Rule
1146.2, Bay Area Air Quality Management District ( BAAQMD ) Regulation 9 Rule 6 , and

V entura Cou nty Air Pollution Control District (VCAPCD) Rule 74.11.1 currently have a 20 ppmv NOx emission limit for instantaneous units. The lower limit was implemented
in SCAQMD in 2012

, BAAQMD in 2013, and will be implemented in VCAPCD in 2014.

Five of the six instantaneous water heater manufacturers identified produce 55 ppmv and 20 ppmv compliant instantaneous units, while one of the manufacturers has stopped producing the 55 ppmv compliant units and only produces 20 ppmv compliant

units due to the rules in pl ace in other California air districts

. A ll six instantaneous water

heater manufacturers confirmed to the District that they sell 20 ppmv compliant instantaneous units to Valley wholesalers or water heater suppliers

. In order to allow sufficient time to sell any remaining 55 ppmv compliant instantaneous units in stock , t he 55 ppmv NOx emission limit would remain in effect until December 31, 2014 and o n and after January 1, 2015, instantaneous units sold, installed, or supplied in the Va lley would be required to meet a 20 ppmv NOx emission limit.

The District is also proposing some administrative amendments to clarify Rule 4308. A n exemption for hot water pressure washers would be added to clarify that these units are not applicable to R ule 4308

. L anguage would be 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. A few definition s w ould also be added and redundant and expired language

w ould be removed from the rule.

Emission Reduction Analysis

As presented in the 2012 PM2.5 Plan , the annual NOx emissions from this source category subject to Rule 4308 were 259 tons per year ( tpy ) ( 0.71 t ons per day ) in 2012. Proposed rule amendments would affect a small portion of the total Rule 4308 sourceSJV

U APCD Governing Board ITEM NUMBER 8: ADOPT PROPOSED AMENDMENTS TO RULE 4308 (BOILERS, STEAM GENERATORS, AND PROCESS HEATERS

— 0.075 MMBTU/HR TO LESS THAN 2.0 MMBTU/HR)
November 14, 2013

3 category , as the baseline NOx emissions from instantaneous units are 2.92 tpy. The District did not specify an emission reduction commitment for this proposed rule

amendment in the 2012 PM2.5 Plan in lieu of conducting a more thorough emission reduction analysis in th is rule amendment project.

Instantaneous units have an estimated lifetime of 20 years. Since Rule 4308 is a point

of

- sale rule, emission reductions w ould occur over 20 years, from 2015 through 2034

, as existing instantaneous units are replaced with new er instantaneous units, new instantaneous units are purchased for new developments, and some end

- users switch

from tank

- style to instantaneous units. Proposed rule amendments would result in approximately 1.82 tpy o f NOx emission reductions upon full rule implementation in 2034, reflecting a 62.3% reduction from baseline emissions. The complete Emission Reduction Analysis is presented in Appendix B of th e Final Draft Staff Report.

Cost Effectiveness Analysis

Pursuant to California Health and Safety Code (CH&SC) Section 40920.6(a), the District is required to analyze the cost effectiveness of new rules

, r ule amendments

, or planning requirements to incorporate all feasible measures

. The District has prepared a cost effectiveness analysis to analyze th e economic feasibility of the proposed 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 c ost e ffectiveness a nal ysis is attached as Appendix C of the Final Draft Staff Report.

Socioeconomic Impact Analysis

Pursuant to CH&SC Section 40728.5, the District is required to analyze the socioeconomic impacts of any proposed rule amend ments that significantly affect air quality or that stre ngthen an emission limitation. No significant socioeconomic impacts are expected from these proposed rule amendments. The s ocioeconomic a nalysis is

attached as Appendix D of t he Final Draft Staff Report.

Rule Consistency Analysi s

Pursuant to CH&SC Section 40727.2, the District prepared a r ule c onsistency a nalysis that compares the elements of the proposed amendments for Rule 4308 with the corresponding elements of other District rules and federal regulations and guidelines that apply to the same type of equipment or source category. Proposed amendments would not conflict with other District rules, or federal rules, regulations, or policies covering similar stationary sources. The r ule c o nsistency a nalysis is presented in Appendix E of the Final Draft Staff Report.SJV

U APCD Governing Board ITEM NUMBER 8: ADOPT PROPOSED AMENDMENTS TO RULE 4308 (BOILERS, STEAM GENERATORS, AND PROCESS HEATERS

— 0.075 MMBTU/HR TO LESS THAN 2.0 MMBTU/HR)
November 14, 2013

4 Environmental Impacts

Pursuant to the California Environmental Qua lity Act (CEQA), the District has investigated the possible environmental impacts of the proposed amendments to Rule

4308 . Based on the lack of evidence to the contrary, the District has concluded that the proposed amendments to the rule will not have any significant adverse effects on the environment. Staff recommends filing a Notice of Exemption under the provisions of the
CEQA Guidelines 15061 (b)(3).

Rule Development Process

Public Workshop for Rule 4308 The District hosted 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 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. All c omments received on or before September 9 , 2013 were considered and incorporated into P roposed R ule 4308 and the

F inal D raft S taff R eport , as appropriate

. Comments received and District responses to

the comments are summarized in Appendix A of the Final Draft Staff Report.

Public Hearing for Rule 4308

In accordance with CH& SC Section 40725, the P roposed Amendments to R ule 4308

and F inal D raft S taff R eport were publicly noticed prior to the Governing Board public hearing to consider adoption of the p roposed a mendments to Rule 4308 . The p roposed

a mendments to R ule 4308

, F inal D raft S taff R eport , 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 is also invited to provide comments during the public hearing for proposed adoption of this rule

.

FISCAL IMPACT :

The District expects no fiscal impact to result from this action

.

Attachments:

Attachment A: Resolution for Proposed Amendments to Rule 4308 ( 4 pages)

Attachment B : Proposed Amendments to Rule 4308 ( 6 pages)

Attachment C : Final Draft Staff Report with Appendices for Proposed Amendments to Rule

4308 ( 50 pages)